BoJ’s Nakamura warns of inflation risks, advocates maintaining current policy

BoJ board member Toyoaki Nakamura, known for his dovish stance, cautioned in a speech today that “inflation may not reach 2 per cent from fiscal 2025 onward” if households reduce spending, which would discourage companies from further price hikes.

Nakamura highlighted that domestic consumption has been sluggish recently. He also pointed to the uncertainty surrounding the sustainability of wage increases, noting that the impact of rising wages on prices has been weak too.

Given the current data, Nakamura stated that it is appropriate to keep monetary policy unchanged for the time being. He was the sole dissenter in the BoJ’s decision to end eight years of negative interest rates and bond yield control in March.