Japanese price expert predicts Bank of Japan will shift to a more aggressive anti-inflation stance

Golden Ten Data, July 30 – Former Bank of Japan official and price trend expert Tsutomu Watanabe stated that the Bank of Japan could shift its policy stance from tolerating inflation to fighting inflation as early as December, which means the pace of interest rate hikes will accelerate. He noted that, following the first round of inflation triggered by the Ukraine conflict and a second round spurred by domestic wage hikes and rising rice prices, the current Middle East conflict is driving a third wave of inflation in Japan. In an interview on Wednesday, the University of Tokyo honorary economics professor said the momentum of the third inflation wave is likely to be weaker than the previous two. Excluding fresh food and energy, the core consumer inflation rate is expected to peak at around 3% in March next year, then gradually decline toward the Bank of Japan's 2% inflation target. He pointed out: “But what really deserves attention is core inflation momentum, which is clearly on the rise and now very close to 2%.” The labor market remains tight, and widespread price increases are further boosting wage growth and inflation expectations.