MNI BRIEF: BOJ's Noguchi Says Price Expectations Must Rise
Bank of Japan board member Asahi Noguchi said on Thursday that second-round effects, such as a rise in inflation expectations that leads to wage hikes, is necessary in Japan and maintaining easy policy is needed to deliver that.
“Differing from the U.S. and Europe that are suffering from the second-round effect amid high inflation rates, the underlying trend of prices remains low in Japan, so the second-round effect is necessary,” Noguchi told business leaders in Akita City.
He also said that a change in price norms is necessary to achieve a 2% price target in a stable and sustainable manner.
“Pass-through of cost increases is spreading, which will affect the underlying trend of prices. The recent spread of pass-through may show that corporate activity based on the view that prices will not rise has changed,” Noguchi said.
He added that a rise in nominal wages beyond price rises, and a rise in both wages and prices is indispensable to achieving the 2% price target.