A core supporter of Prime Minister Ishiba Shigeru asserts that the new government trusts central bank decisions and will work closely with the bank to tackle the risk of returning to deflation. Their unity and policy coordination highlight the flexibility in policy adjustments and a commitment to economic stability.
Recently, Japan’s Economy Minister Ryozo Akizawa revealed that both Governor Ueda Kazuo and Prime Minister Ueda Kazuo view overcoming deflation as their primary task and have decided to continue following the 2013 joint policy agreement. Ryozo Akizawa stated that even if deflation is not fully resolved, gradual interest rate hikes would be considered, believing this won’t significantly harm loan conditions or the economy. He is confident that both parties can overcome deflation and predicts that the central bank will maintain open communication with the government to implement suitable monetary policies, stabilizing the 2% price target. The high consistency, continuity, flexibility, and foresight among policymakers, along with effective cooperation and communication mechanisms, will facilitate price stability and economic recovery.
In this context, the central bank should continue to enhance the transparency of its decision-making process and clearly communicate its policy intentions and future directions to the public and markets through regular policy statements, press conferences, and economic reports. Additionally, Japan needs to pursue structural reforms to boost productivity and potential growth, including labor market flexibility, innovation, and technological development. Given the current global economic uncertainties, Japan must closely monitor international financial market dynamics, geopolitical risks, and changes in global supply chains to timely adjust domestic policies in response to potential external shocks.
