Bets rise for the Bank of Japan to exit ultra-easy policy with inflation consistently exceeding the 2% target.
Reports suggest that the government will base its decision on the strength of wage talks in mitigating the impact of price increases.
However, it wasn’t clear from the Kyodo report if the government would officially declare an end to deflation. In the last few years the government has maintained that Japan was no longer in deflation, but it has stopped short of declaring a complete victory over falling prices. With inflation having exceeded the BOJ’s 2% target for well over a year, many market players expect the central bank to exit negative interest rates in coming months in what would be a landmark move away from years of ultra-loose monetary policy.
Prime Minister Fumio Kishida or cabinet ministers may make the announcement at a government panel meeting, news conference or in a monthly economic report rather than at a formal venue like the cabinet meeting, Kyodo reported.