Japan Prime Minister Shinzo Abe said in a Nikkei Asian Review interview that while, BoJ hasn’t reached the 2% inflation target yet, Japan is “no longer in deflation”. And Abe emphasized “what we are really focused on is employment.” He outlined a plan to overhaul the social security system for the new three years.

Abe intend to raise retirement age beyond 65. And he said “more labor participation would boost economic growth, raise tax revenue and generate more social security premium receipts.” The first year of his next three year term will focus on labor issues. Pension and medical care system will be tackled in the following two years.

Additionally, Abe pledged to ease the impact of the planned sales take hikes, from 8% to 10% with “bold countermeasures”.

He also played down the threats of US trade policy and said “the U.S. and Japan share a broader goal of expanding bilateral trade and investment for the benefit of both countries and achieving a free and open Indo-Pacific based on fair trade.”

Abe will compete with former Defense Minister Shigeru Ishiba in a ruling party leadership contest on September 20.

Summary of Opinions of BoJ’s December 18-19 meeting revealed a prevailing view among the board members on a lack of urgency in tightening monetary policy. The consensus was that delaying the decision to tighten poses minimal risk. This general sentiment indicates BoJ’s preference for a measured approach, prioritizing stability and sufficient data before considering changes.

The summary acknowledged that the sustainable and stable achievement of price stability target, set at 2%, is not yet certain. In considering whether to end the negative interest rate policy and yield curve control framework, the board stressed the importance of confirming a virtuous cycle between wages and prices.

To reach the 2% inflation target sustainably, one member noted that “growth momentum in nominal wages needs to strengthen further”. It’s also noted that wage growth has not kept pace with inflation. And, even with potentially higher wage hikes in the spring, the risk of inflation significantly surpassing 2% remains “low”. Current policy approach does not risk “falling behind the curve” in response to inflation dynamics.

The summary also noted that acknowledged that the need to “rapidly tighten monetary policy is small”. At the same time, “the cost incurred if this risk materializes would be significant.”

Full BoJ Summary of Opinions here.