Bank of Japan Deputy Governor Wakatabe: household sector under severe pressure due to pandemic
- Japan's economy sustaining recovery trend
- Japan's economic recovery will become clearer as pandemic impact eases
- job, income conditions remain weak
- households not yet experiencing positive cycle in which rising income boosts spending
- households' pent-up demand likely to reach significant size, likely to help consumption recover
- inflation expectations moving sideways with some signs of pick-up
- further improvement in inflation expectations needed to achieve boj's price target
- Japan's consumer inflation remains slightly positive when stripping away impact of one-off factors like cuts in cellphone fees
- BOJ's efforts on climate change does not mean it is paying less attention to more imminent challenge of ending deflation, stabilising prices
- Japan has escaped deflation because BOJ has not wavered in its stance of maintaining aggressive monetary easing
- BOJ must avoid distancing itself from 2% price target, easy policy as doing so could destabilise fx market
- even if the Fed enters tightening cycle, that does not necessarily mean boj must adjust monetary policy too
- Japan won't achieve sustainable inflation with cost-push factors alone
- crucial to avoid premature shift to monetary tightening with inflation very distant from boj's target
Headlines via Reuters from his speech. Bolding mine.
