BOJ and Price Stability: Ideas Later.

After decades of deflation, BOJ faces test of maintaining price stability

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TOKYO (Kyodo) -- For the Bank of Japan, achieving its long-sought 2 percent inflation target is not the end of its quest for price stability but the beginning of a new phase in its monetary policy, analysts say.

The central bank concluded at a two-day policy meeting through Friday that underlying inflation has "generally" reached the 2 percent goal, nearly 14 years after the government and the BOJ set the target in a coordinated effort to lift the country out of its deflationary malaise.

The central bank launched a large-scale monetary easing policy in April 2013, dubbed the "Kuroda bazooka" after then Governor Haruhiko Kuroda, aimed at beating chronic deflation and creating a virtuous cycle between wages and prices.

Analysts say the BOJ's latest assessment reflects a fundamental change in Japan's inflation dynamics, driven largely by a global inflation surge rather than the growth of demand pursued by the central bank.

The question now is whether inflation can remain at around 2 percent, an ultimate goal for the BOJ to ensure price stability, and how it should respond if upward pressures on prices continue to build.

The BOJ faces a complex challenge in monetary policy, seeking to raise interest rates to prevent inflation from overshooting while ensuring the policy will not undermine wage growth and domestic demand.

"The BOJ may have been slow to recognize that underlying inflation had reached, or even exceeded, the target," said Shinichiro Kobayashi, principal economist at Mitsubishi UFJ Research and Consulting.

He added that price increases may have gone beyond the desired pace. BOJ data show that Japan's wholesale prices have stayed around or above 7 percent since May, possibly pushing consumer prices up sharply in the coming months. BOJ Governor Kazuo Ueda has warned against elevated wholesale prices.

"The greatest significance of reaching 2 percent is that there is no longer a need to maintain an accommodative monetary environment," Kobayashi said.

Shifting away from its longstanding ultraeasy policy to lift prices, the BOJ must now assess at each policy meeting whether more rate hikes are needed to prevent inflation from accelerating.

Kobayashi attributes the achievement of 2 percent inflation not only to the easing policy but to changes in economic conditions following the COVID-19 pandemic.

Supply chain disruptions, recovering demand, labor shortages and higher import costs have all made it easier for companies to raise prices, while consumers have become more accepting of price increases due to wage growth.

Yuichi Kodama, chief economist at Meiji Yasuda Research Institute, was more skeptical about the BOJ's role in realizing the inflation goal.

"Taking more than 10 years to achieve the target suggests that monetary policy had little to do with it," Kodama argued, citing the global inflation surge and the resulting rise in inflation expectations as greater contributing factors.

The BOJ vowed to meet the 2 percent goal in roughly two years when the Kuroda bazooka was launched, but it had to repeatedly push back the timeframe.

Kodama said it is the BOJ's responsibility to anchor underlying inflation around 2 percent over the longer term.

"I don't think the supply-demand gap is generating much inflationary pressure. It is probably around zero or slightly positive," he said. "A bigger factor is that rising commodity prices have pushed up people's inflation expectations."

The BOJ believes higher wage increases in recent years have supported private consumption, leading to price increases. But the outlook for demand-pull inflation remains unclear, some analysts say.

Consumer spending could slow as long as the Middle East crisis keeps oil prices high and the yen remains weak after dropping to a 40-year low against the U.S. dollar.

Both factors elevate import costs, as Japan relies heavily on the region for energy supplies and a weaker yen raises the costs of goods from other countries.

"At some point, we need to examine whether the 2 percent inflation target is still appropriate for Japan today," Mitsubishi UFJ's Kobayashi said.

"With Japan's population shrinking and demand declining, was it the right goal in the first place?" he asked.

Article source:  https://mainichi.jp/english/articles/20261030/p2g/00m/0bu/049000c

BOJ and Inflation Target: Updated Oct. 31, 2026.

 

BOJ says 2% inflation target generally achieved, maintains policy rate

Ideas

Yes the goal target might have been reached but that doesn't mean that there could be some sectors still feeling the affects of deflation and at the same time some sectors might even be felling the affects of inflation well above the 2 percent target as somes its been noted inflation and reach 3 plus percent.

Yes keeping the benchmark interest rate unchange at 1.25 percent is good idea as there are gain pockets or sectors that might still be feeling the affects of deflation is not a one time tinkt that comes and goes as it can linger on or hang on again in different sectors in the economy.

It seems that has already happened, but most central banks prefer to keep or try to manage inflation at around 2 percent as they feel its a manageable level and there is adequate money  flowing through the economy too at the same time.

Also its seems there have been many times, since the pandemic have inflation has increased beyond the 2 percent target to sometimes above 3 percent which can be very stressfull for the lower middle class and even the middle class households in Japan.

Yes inflation in Japan is not sustainable and hasn't been stable as it often fluctuates and can sometimes get in the the 3 percent range and at the same time its not good as companies need stability in order to plan ahead and households too need stability in order to budget their finances correctly.

And yes, its not uncommon for there to be some dissenting voices and everyone sometimes has a different opinion about that what to do and when to do it and dissenting voices negatives and they are just giving differents idea about how to achieve a goal or target.

Yes, a dissenting voice sees things differently and sometimes feels a central bank might be moving too slow and needs to move quickly to fend off any possible inflation in the future.

But at the same time, as noted, there are key risks that need to be examined more carefully as the risks, as noted again, can affect an economy and maybe even reduce or slow down an economy too much.

At the time, in 2013, Japan was in a deflation period and getting inflation to the 2 percent seemed like a reasonable goal but its taken almost 13 years to reach that level as deflation and even stagnation were consistently challenging during those years.

And an aggressive monetary easing strategy might have seemed like the correct thing to do at the time as lowering the key rate was supposed to put more money into the economy and even spur business and consumer spending which it didn't really do or too a very long time to get businessa and consumers to spend.

External factors driving inflation is not the best way to get inflation to increase organically as consumer demand is always the best way to grow positive inflation, as increased demand but consumer spending is an incentive for companies to increase prices and maybe even spur them to increase hiring, increase investments, and a host of other positive actions.

Wage growth in Japan, has been a very resent situaton, as for the most part, many companies were not really giving adequate wage increases for a long time and, and with the governments urging companies started to finally increase wages in 2023.

And yes, deflation is still very much a situation in Japan as there are some sectors and regions in Japan experiencing some form of delfation and it's just a little too soon to say it's gone. 

Japan is a mature economy and as a result doesn't grow that much compared to India or China which are still considered emerging economies and still have a lot of resources to grow their economies.

A growth of 0.7 percent might not seem like that much for the size of Japan's economy its still a good amount of growth and should not be taken or seen and a negative.

Even though 2.5, 2.6, or even 2.4 is slightly above the 2 percent target it's probably still in the range that the BOJ might still see as being manageable. But it it were to increase to well above 2.5 then it might be a problem for the BOJ and they might need to begin to think about increasing the key rate to try and reduce inflation back down to the 2 percent range.

And as both the US Reserve and the EU central banks kept their rates unchanged the BOJ most likely is going to do the same thing, as for the most part, most or many central banks seem to follow what the US Reserves does, but the BOJ up until recently didn't do exactly why the Reserve did and kept their rate at zero or under.

Yes, the BOJ did increase its rate to 1.25 as for a very long time it had kept the rate at zero or near zero but just in the past year or maybe 18 months its has begun to increase the rate and there was change in leadership at the BOJ which meant a change in policy. 

But at the same time, its not a rate change happy organization, meaning its not looking to change or increase rate every month as the BOJ is still a very conservative group and the saying "do no harm" is still important for the BOJ.

And yes, of course the markets are expecting another rate hike in December but its too early to know exactly what the BOJ is going to do as things between now and December can change very quickly which could upset that normal workings of the Japanese economy but no one knows exactly what is going to take place between then and now.

Have a nice day!

Article source: https://mainichi.jp/english/articles/20261030/p2g/00m/0bu/041000c  

South Korea and Consumer Sentiment: Ideas Later.

Chip boom fails to lift spending as private consumption falls

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Korea's economy is growing on the back of a semiconductor export boom, but consumers aren't feeling the benefits.

Private consumption fell 0.2 percent in the third quarter from the previous quarter, marking its first decline since the second quarter of 2023, according to preliminary data on third quarter economic growth from the Bank of Korea (BOK), Tuesday.

Private spending growth had already slowed from 0.6 percent in the first quarter to 0.4 percent in the second before turning negative in the third.

Spending declined for both goods, including cars and home appliances, and services, such as financial and dining services.

The decline came even as the economy expanded 1 percent in the third quarter from the previous quarter, exceeding the central bank's forecast of 0.3 percent.

Weak private spending stood in contrast to stronger headline growth driven by robust semiconductor exports. While the export boom has lifted overall economic growth, its benefits have yet to result in a stronger recovery in domestic consumption.

The BOK attributed the decline in private consumption partly to a drop in financial services spending as stock trading volumes fell due to the sluggish stock market. It also pointed to delays in vehicle deliveries caused by a full-scale strike by Hyundai Motor workers in August, the first in a decade.

"Private consumption has not shown a particularly strong recovery so far, partly because of structural factors such as high household debt and population aging. We expect private consumption to gradually recover in the first quarter of next year," said Lee Dong-won, director general of the BOK's economic statistics department.

A sustained recovery in consumer spending remains uncertain amid inflation stemming from the prolonged conflict in the Middle East and volatility in the stock market.

The BOK's latest consumer survey also pointed to cooling consumer sentiment.

According to the central bank data released Tuesday, the composite consumer sentiment index fell 1.2 points from the previous month to 105.4 in October, reversing a one-month rebound.

The index, which combines six indicators of consumers' perceptions of current economic conditions and their outlook, is set at 100 for its baseline. A reading above 100 indicates that optimists outnumber pessimists.

Consumers also grew more pessimistic about current and future economic conditions. The current economic conditions index fell 1 point from the previous month to 82, while the economic outlook index dropped 2 points to 88.

Article source:  https://www.koreatimes.co.kr/economy/20261027/chip-boom-fails-to-lift-spending-as-private-consumption-fallsSouht 

South Korea Q3 Growth: Ideas Later.

Chip exports drive Korea's Q3 growth to 1%, triple BOK forecast

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GNI per capita almost certain to top $40,000 in 2026 for 1st time: finance ministry

Korea's economy expanded 1 percent in the third quarter from the previous quarter, extending its stronger-than-expected growth on the back of booming semiconductor exports, the Bank of Korea (BOK) said Tuesday.

After exceeding expectations in the first and second quarters, the economy continued to outperform forecasts in the third quarter, putting annual growth within reach of 3 percent, with some saying it may even reach up to 4 percent.

Preliminary data from the central bank showed that real gross domestic product (GDP) rose 1 percent in the July-September period, significantly exceeding the BOK's own projection of 0.3 percent for the quarter.

The country's quarterly growth rebounded sharply to 1.8 percent in the first quarter from a 0.1 percent contraction in the fourth quarter of 2025, before standing at 0.6 percent in the second quarter, also beating expectations.

In the third quarter, facilities investment rose 4.1 percent, mainly on increased investment in machinery, including semiconductor manufacturing equipment. Investment in intellectual property products grew 2.3 percent as spending on research and development and software increased.

Exports grew 2.3 percent, driven mainly by semiconductors and electrical equipment. Imports rose 2.4 percent, led by increases in crude oil and semiconductor manufacturing equipment.

By industry, manufacturing grew 2 percent, led by computers, electronic and optical equipment, as well as machinery and equipment.

Agriculture, forestry and fisheries rose 5.9 percent, led by crop cultivation and fishing. Services edged up 0.2 percent, supported by business services, information and communications, and transportation.

The stronger-than-expected growth is likely to prompt the BOK to raise its 3.3 percent growth forecast for this year, announced in August. The central bank is scheduled to release its revised forecast in November.

Lee Dong-won, director general of the BOK's economic statistics department, said an annual growth of 4 percent remained possible depending on the economy's performance in the fourth quarter.

If achieved, it would mark the highest annual growth rate in five years, since the economy expanded 4.7 percent in 2021.

"Even if growth in the fourth quarter is flat compared with the previous quarter, annual growth would mathematically come to 3.6 percent. If the economy grows 1.4 percent or more in the fourth quarter, an annual growth of 4 percent would be possible," Lee said during a briefing.

"Computers and electronic equipment, including semiconductors, accounted for about 60 percent of GDP growth from a year earlier, with semiconductors alone estimated to have contributed about half."

The Ministry of Finance and Economy said the latest GDP data makes it almost certain that Korea will achieve a per capita gross national income (GNI) of $40,000 this year.

The Korean won's appreciation against the U.S. dollar and an upward revision to the GDP growth outlook are both contributing to the increase in per capita GNI.

"The country's per capita income, which has remained in the $30,000 range, is expected to rise to the $40,000 range. It is encouraging that there is further momentum for it to rise even higher," a ministry official said during a briefing.

Per capita GNI is calculated by taking the total income earned by a country's residents at home and abroad and dividing it by its population. It is commonly converted into U.S. dollars to compare living standards across countries.

If achieved, the milestone would come 12 years after Korea's per capita GNI first surpassed $30,000 in 2014.

Article source:  https://www.koreatimes.co.kr/economy/20261027/cover-story-chip-exports-drive-koreas-q3-growth-to-1-triple-bok-forecast

Japan and Deflation: Updated Oct. 27 2026.

Japan minister urges caution on declaring end to deflation

Ideas

The BOJ has been trying for almost a decade or more the reach the 2 percent inflation target which most central banks see and a manageable level but hasn't been able to get there just yet.

Yes,"careful judment" is the correct response as there might be some positives but at the same time there are some significant negative related to deflation too.

For example some consumers and households might see delation a good as their purchasing power might increase and of course lower prices but at the same time for businesses deflation is a real job killer and business investments might decrease significantly too.

Yes the government needs to be sure it makes best assessment as the stock market and businesses will be watching and the stock market increases or decreases on what kind of communiciation comes and business too the same thing many times related to investment and capital spending.

Slipping back into deflation could mean the possibility of less hiring and less investments and many other economic activities that could undermine growth of the Japanese economy in the future.

Yes, its taken 14 years for the BOJ to get inflation under control as whatever strategy they have tried just hasn't worked and to be fair it hasn't been without trying but at the same time the BOJ hasn't followed the usual script of increasing the key rate as many times it would often say the economy is just too weak at this time to increase the rate as their might be too many side affects.

The problem is that since 2022 inflation on many things in Japan has been above the 2 percent target so not only is the BOJ having to manage inflation above the 2 percent target but at the same time trying manage the idea that deflation in many sectors in the economy was still a lingering challenge.

So the BOJ has been trying to manage both inflation and deflation at the same and the've had to be very cautious and one strategy which works for one situation can trigger the negative for the other situation.

Yes, while temporary factors are important to look at and try to manage them correctly the real challenge seems to be wage increases and here is where it gets very challenging as for example the media likes to talk about the name-brand large companies that get all the news but only about 30 percent of worker in Japan work for the large companies, which get the large wage increases while 70 percent of the workers in Japan work for small and mid-size companies that just don't have the profit margins or resources to give the same wage increases as the large companies do, even though the small companies would like to give better wage increases.

As a result, Japan now seems to have a two-teired  economy of the haves and the have-nots and the haves are getting all the benefits and the have-nots in many cases are being left behind and it seems like no one is really paying attention to what is really going in the economy.

Yes monetary easing might help with the 2 percent target and it would maybe give more incentives for consumer buying or borrowing money by both busiensses and houesholds but at the same time it might have a few negatives too such a even though interest rates would decrease it might cause those with hefty bank savings and so on too feel like they are losing out on increases in their saving or invesments.

Yes the BOJ is very conserstaive and the goal is always, for the most part, do no harm, and any communication or statement they might make, again, could cause the stock market to increase or decrease and cause some businesses or many re-think their capital spending and investments in the economy which the BOJ tries not cause too much harm.

Have a nice day!

Article source:   https://mainichi.jp/english/articles/20261023/p2g/00m/0bu/033000c

Japan Dept. Stores: Updated Oct. 26, 2026

Japan dept. stores see record duty-free sales, shoppers in Sept.

Ideas

Tourism, especially foreign tourism or foreign tourists, is becoming an economic driver of the economy as it seems foreign tourism spending is now a major economic activity in Japan.

Of course the weak Japanese yen is the major driver of sales in department stores and even not to sales but the number of shoppers too and it seems many foreign tourists are taking advantage of the increased purchasing power the weak yen brings.

Having been to Japan many times and seen all of the duty-free signs and, and at least for me and my partner, going through the steps needed to get 10 percent duty-free discount just wasn't worth it at as it took a long time, at least at the two stores that we tried to get the discousant. 

Maybe the process has now improved but back then just before the pandemic it seemed to be more hassle that good for only 10 percent. but maybe they've streamlined the process now.

Maybe the spending of some customers is enough, with process being more customer friendly now, hopefully and if a customer does spend around  101,000 yen they could get back 10,100 yen, possibly but I guess it depends on other things too , which might still be worth it and again if the process now have become for friendly and less time consuming.

For example in South Korean in Sept. was the Korean thanksgiving holiday called Chuseok, and these days, many Koreans don't go to their hometowns but many prefer to travel and as the holiday this time was only 4 days that is a perfect short trip to Japan to take advantage of the weak Japanese yen and spend a little more.

Yes, the numbers from China might have decreased but Chinese consumers/customers are now moving more and more from the lower middle class to the middle class and even the upper middle class and they want to travel and have money to spend and as the yen is weak the have more purchasing power to spend in Japan.

But as suggested in other articles not all Chinese are following what Beijing is saying as there is still a sizable number traveling to Japan to take advantage of the weak Japanese yen.

An increase of 2.1 percent might not be bad but of course it depends on what share-holders think is good and of course they, for the most part, are never satisfied and always want more.

It interesting that there are 69 companies that run 169 stores in Japan which shows that no one company has a monopoly on stores or sales.

But it must be remembered, that even though there are 68 stores not all are equally profitable and its been suggested that only a handfull, mostly in the major metro areas, are making a profit and many in the rural areas or less than metro areas are not doing so well these days.

And those doing well in the major metro areas have transitioned to catering to the so-called upper middle class foreign tourists who have money to spend and burn and those dept. stores are doing very well.

Have a nice day!

Article source:  https://mainichi.jp/english/articles/20261023/p2g/00m/0bu/057000c

Japan Trade Deficit: Updated Oct. 24, 2026.

Japan logs 2.8 tril. yen 1st-half trade deficit amid Middle East crisis

Ideas

Japan is a resource-poor country which means it has to import much of what it needs and as  such global prices can be a major challenge for many importers and wholesalers in Japan and of course the weak Japanese yen have a major affect too on import products and commodities.

A deficit doesn't mean Japan didn't have a lot of exports and exporting is a major economic driver for the economy but again the weak yen, which can be both positive and negative but at this time the weak yen with increased global prices is having serious challenges for the Japaneae economy.

Again, Japan is a resource-poor country and has to import almost everything which makes it very vulnerable to volatile global prices and now the Middle East situation crude oil is causing havoc globally not just in Japan.

And then there is so-called AI craze and high demand for products which drives up the cost of many electronic components everywhere globally and look no further than the price of computers on Amazon to see how since 2025 everthing related to electronics has increased.

Japan is a major export economy and exports are one of the few economic drivers that is keeping the economy going in the right direction, and like South Korea, it has very few economic drivers it can depend on the grow the economy as South Korea depends heavily on Samsung and SK Hynx and and while its good but when its not so good both economies depending on just a few economic drivers is risky.

Japan has just recently gotten back into the semiconductor game and it's nowhere near catching up to Taiwan or South Korea but it's moving forward in the right direction.

Japan, like other countries need to increase its semiconductor electronic components and more and more companies are looking to upgrae their AI capabilities and there is a race, globally, to have AI efficient operations.

Also, Japan too has been getting back into the game with production with other forms of semiconductors after seceding market share to Taiwan and South Korea over the past decade.

As the Middle East situation has not been resolved as of yet, Japan needed to find another source of crude oil and the US has been shipping more crude oil to Japan every month and it's not a humanitrian decision but of course a business decision and the US was more than willing ship its crude oil to Japan, for a price of course.

And too, as the Japanese yen is weak, unfortunately the price of crude oil from the US is even more expensive than it should be but Japan has no choice but to pay the higher price due to the weak yen.

The Japanese yen seems to either getting weaker and or stuck in a range where it can't become stronger for the good of the economy and the deteriment of importers and the domestic economy.

The Jpanese trade deficit might be seen as a negative by some but overall it also might be considered a positive and a weak yen, which seems to be the main driver of the deficit, has a silver lining in that the weak yen drives up the price of Japanese products overseas and Japanese export companies can get or bring home more income and exports can be seen as the main economic driver of the Japanese economy.

Yes, for the most part, crude oil was the main import commodity from the US as Japan had to find another source of crude oil as the Middle East its causing massive diruptions in the supply chains from that area.

China, has become a major player in car production and especially EV and hybrid vehicles and Japaneae car makers are having major challenges keeping up with what China is doing. 

But at the same time, at least for Japan car makers, Chinese cars sales in the US have not reached a point that Japan needs to be worried just yet, as there is just enough trade friction between the US and China that for the time being Japan doesn't need to worry about China seeing a major increase in market share in the US.

At the same time the market share of Japanese cars in China continues to decrease which as major concern for Japan and Japan car makers.

Have a nice day!

Article source:   https://mainichi.jp/english/articles/20261021/p2g/00m/0bu/032000c