Japan government, BOJ gap on inflation laid bare ahead of key policy meeting
Japan's Economy Minister Minoru Kiuchi stated that the country is not yet ready to declare an end to deflation, despite the Bank of Japan's belief that inflation targets are being met. This highlights a policy disconnect between the government and the central bank ahead of a critical policy meeting.
Why it matters
The divergence in economic outlooks between the Japanese government and the central bank creates uncertainty for global markets regarding future interest rate adjustments and monetary policy.
Japan's Minister of State for Economic and Fiscal Policy Minoru Kiuchi speaks during the Reuters NEXT Newsmaker event in Tokyo, Japan, on Oct 15, 2026. (Photo: REUTERS/Issei Kato)
TOKYO: Japan has yet to meet the conditions for officially declaring victory over deflation, Economy Minister Minoru Kiuchi said on Friday (Oct 23), exposing a divide with the Bank of Japan as it sees the economy on the cusp of durably achieving its 2 per cent inflation goal.
Kiuchi's remarks, from a close ally of dovish Prime Minister Sanae Takaichi, underscore a disconnect between the government and the BOJ on price moves.
They also come ahead of the BOJ's policy meeting next week, when it is seen signalling that underlying inflation has hit its 2 per cent target as the Iran war-induced energy shock and rising import costs from a weak yen push up prices.
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