BoJ’s Noguchi urges patience before Japan’s inflation mindset shifts

BoJ Board Member Asahi Noguchi, a known dovish, emphasized in a speech today that Japanese society still needs “considerable time” to go before fully adopting a mindset aligned with the central bank’s 2% inflation target. Noguchi highlighted the importance of BoJ maintaining its accommodative monetary policy until this shift in mindset occurs.

With inflation surpassing the 2% target for over two years and nominal wages rising, Japanese firms are increasingly willing to pass on higher costs through price hikes. However, Noguchi highlighted that real consumption remains weak, as households continue to expect low price growth—a mindset shaped by Japan’s prolonged deflationary period.