Japanese central bank unlikely to raise interest rates in December? Japanese Prime Minister: Sustainable inflation driven by wage growth has not been achieved yet.

Japanese Prime Minister Sanae Takaichi stated on Tuesday that Japan has not yet achieved sustainable inflation accompanied by wage growth, indicating her preference for the Bank of Japan to slow down its rate hikes. Takaichi told the Japanese parliament that although the consumer price index remains around 3% due to continuous food price increases, Japan has only "completed half of the task" in achieving sustainable and stable price growth supported by stable wage growth. Takaichi said, "I hope the Bank of Japan can implement appropriate monetary policy to achieve the sustainable and stable 2% inflation target." She has consistently advocated for expansionary fiscal and monetary policies. She responded to questions from the leader of the largest opposition party, Yukio Hatoyama, a former Japanese Prime Minister. He warned that blocking the Bank of Japan from raising rates could lead to increased import costs and exacerbate overall inflation, as it would devalue the yen. Takaichi also stated that her government will strategically arrange fiscal expenditures to increase household income, improve consumer confidence, and strengthen economic power. She expressed caution about the proposal to reduce Japan's consumption tax rate, which was put forward by some opposition parties. She mentioned issues such as retailers needing time to adjust their systems to accommodate the new tax rate. Takaichi's comments on monetary policy could influence the Bank of Japan's decision on whether to resume rate hikes at its next meeting on December 18th and 19th, with some market participants making predictions based on this. Bank of Japan Governor Haruhiko Kuroda is scheduled to give a speech and hold a press conference in the central Japanese city of Nagoya on December 1st, where he may provide clues about the possibility of a recent rate hike. The Bank of Japan ended its decade-long massive stimulus policy last year and raised rates to 0.5% in January this year, believing Japan was on track to achieve the 2% inflation target. Since then, the central bank has maintained rates unchanged, including at last week's policy meeting, to ensure Japan can further progress towards its inflation goal effectively, supported by stable wage growth. Critics argue that the Bank of Japan's slow pace of rate hikes has led to yen depreciation, pushing up import costs and keeping the inflation rate above the 2% target for an extended period of more than three years. During the press conference after last week's policy meeting, Kuroda stated that the possibility of the Bank of Japan achieving its baseline forecast had "increased," sending the clearest signal yet that a rate hike could occur as early as December. However, because Kuroda's remarks were not as strong as some market participants had anticipated, the yen exchange rate fell. This prompted Japan's Finance Minister to warn against excessive depreciation of the yen.