Japanese Prime Minister Sanae Takaichi said on Tuesday that Japan has yet to achieve sustainable inflation supported by wage growth, signaling caution on further interest rate hikes. Although consumer inflation remains near 3% due to rising food costs, she told parliament that the country is still “half way” to reaching stable price growth supported by stronger wages. “I hope the Bank of Japan conducts appropriate monetary policy towards sustainably and stably achieving its 2% inflation target,” Takaichi added. Her comments followed opposition leader Yoshihiko Noda’s warning that preventing rate increases could weaken the yen and push up import costs. Takaichi also noted her government will “strategically” deploy fiscal spending to raise household income, improve consumer sentiment, and strengthen the economy. The BoJ ended a decade-long stimulus last year and raised short-term rates to 0.5% in January, seeing Japan close to its inflation goal.
