Japan Economic View:

 Article Source: https://mainichi.jp/english/articles/20230425/p2g/00m/0bu/011000c

Article:

TOKYO (Kyodo) -- Japan on Tuesday left its monthly economic assessment unchanged for April, reflecting resilient consumption and corporate spending, although weakening overseas demand is clouding the outlook.

In the April economic report, the government said the economy is "picking up moderately," although some weaknesses are seen, using the same expression for the fourth straight month. It lifted its view on imports for the first time in nine months, now saying that they are "flat" rather than weakening, as described in March.

Ideas:

Many times a central bank will keep it notices unchanged as a way to not scare or worry the financial markets. So in this case that is probably what is happening as they see the economy maybe is somewhat stable and growing at a moderate rate and no need to upset the markets.

Just what does the word flat mean in this situation? Does it mean imports have not increased or does it meany import prices have not increased and remain unchanged.

Consumption might seem resilient but again what does that mean. Has consumer spending reached a level of strength that now it can help the economy grow or improve or is just better than before such as during the pandemic.

Article:

The Cabinet Office acknowledged that slowing overseas economies caused by monetary tightening pose downside risks to the Japanese economy, adding that inflation and fluctuations in financial markets warrant "full attention."

The government also retained its views on other key components of the economy. Private consumption, which accounts for more than half of Japan's gross domestic product, is "picking up moderately" despite inflation accelerating at the fastest pace in decades.

Ideas:

Most of the advanced economies, globally, that increased key interest rates, which one major side effect is the slowing down of an economy as a way to decrease inflation in that economy. 

Of course Japan, a major exporter of cars and other products might be seeing the side effect related to decreased demand in those global economies. 

Private consumption or consumer spending might be picking up, "moderately" but it it enough to boost or increase economic growth in the economy.

And how long can consumer spending be sustained if inflation continues in Japan. 

At the same time, maybe consumers have been are tired of the pandemic and just want to get out and do things despite increase in inflation.

Article:

Household sentiment is improving, helped by the waning impact of the COVID-19 pandemic and rising pay. The outcome of annual wage negotiations between labor unions and management is expected to be the best in about three decades.

Capital spending is "picking up," the report said. The prices of goods traded between companies are steady, a change from the previous month's expression that they were rising at a slower pace.

Ideas:

Household sentiment might be improving because the pandemic as ended and now families can get out and do many things that they couldn't do for a few years. 

So there might be boost in the economy for the time being until inflation begins to take its toll on consumers and spending. But for now its not having that big of an effect.

Wage growth might be good but will it be for all companies, big, medium, and small or will it be only for big companies who can afford the wage increases.

Capital spending is key indicator of company sentiment. If they feel about the future of economic conditions they will tend to spend more now than later.

Article:

The monthly report also pointed out that exports are weakening, a worrying sign for the export-reliant Japanese economy. The assessment came despite a recovery in demand from China and a boon from a sooner-than-expected revival in inbound tourism, which is counted as exports in Japan's trade data.

Concerns have grown about the strength of U.S. economic growth. The Federal Reserve has been raising interest rates to cool demand and fight soaring inflation, while the collapse of regional banks there has rattled financial markets.

Ideas:

Exports in Japan only makeup about 20 percent of GDP that might be enough for concern as that  20 percent if decreases too much could be a challenge for the Japanese economy.

But at the same time international tourists coming to Japan are increasing but maybe not at the level 2019 level but its still good spending by tourists in Japan as the weak yen is motivator for tourists. 

There are many side effects to the increase in the key rate in the US. And unfortunately Japan, as a major exporter to the US might be experiencing some of those side effects at the moment. 

Article:

Still, the government report raised its view on China, a major trading partner for Japan, for two consecutive months, underscoring strength in production, exports and private consumption.

The global economy continues to "pick up moderately despite weakness in some regions," the report said, referring to South Korea, Taiwan, Germany and Britain.

Ideas:

China is both positive and negative as its economy is suspect with the housing market situation but if the rest of the economy is strong and the the housing market situation doesn't affect the rest of the Chinese economy it good be good.

South Korea seems to have continued inflation and its overall economy seems to be somewhat stagnant at this time. 

But companies such as Samsung continue to hire workers despite the weak economy. The last report stated they hired 6,000+ workers in 2023. 

And a news report just came out that stated Seoul had some of the highest food and supermarket prices in the world and the report said Japan and Tokyo was not even close the food price increases in Seoul.

Have a nice day and be safe!

Japan Consumer Inflation.

 Article Source:https://mainichi.jp/english/articles/20230421/p2g/00m/0bu/019000c

Article:

TOKYO (Kyodo) -- Consumer inflation in Japan accelerated to 3.0 percent in fiscal 2022 through March, the fastest pace in 41 years and above the Bank of Japan's 2 percent target, in what the central bank views as a blip caused by higher import costs and a weaker yen, government data showed Friday.

In March, the nationwide core consumer price index, excluding volatile fresh food items, climbed 3.1 percent from a year earlier. Government energy subsidies helped eased some inflationary pressures but the key gauge of inflation still remained above the BOJ target for a year.

Ideas:

The increase in consumer inflation might not have been a "blip" as  described by the Bank of Japan as it seems inflation since the pandemic has been steadily increasing.

Most central banks, such as the Bank of Japan, want to keep inflation between 2 and 4 percent as they its manageable or controllable, but when it reaches 3 percent all central banks seems to get worried that its out of control or too much.

The BOJ 2 percent target is/was more about consumer demand and consumer spending and not so much about overall inflation such as companies "passing- on their costs to the next int supply chain or the final consumer.

Article:

Japan has seen more evidence of broadening price hikes as companies are passing on higher costs to consumers. Prices are expected to rise further in coming months, especially for food items, in a blow to households.

The last time the core CPI rose as sharply as the previous business year was in fiscal 1981 when it increased 4.0 percent.

The BOJ expects the core CPI will undershoot 2 percent in fiscal 2023 from April as the year-on-year effect will peter out. New Governor Kazuo Ueda, who will hold his first policy-setting meeting next week, has said ultralow rates are necessary to promote more wage hikes by companies.

Ideas:

It took many years for many Japanese companies to finally begin to pass on their costs to consumer as they were reluctant for fear of losing customers.

And now as the profit margins continue to shrink now they feel they have no choice but to pass on their costs as needed to keep their profit margins stable.

The BOJ might think prices are going to stabilize but tell that to a family or household as see if they believe it as their monthly costs keep increasing.

The ultra low rate is important for many reasons but I'm not sure if companies think its important for the wage increases that are needed in Japan.

Article:

Both food and energy prices saw their sharpest gains since 1980.

Food prices jumped 5.4 percent while energy prices, including for kerosene and gasoline, surged 12.8 percent, the Ministry of Internal Affairs and Communications said.

In March alone, however, energy prices dropped 3.8 percent, as the government is curbing utility bills.

Ideas:

As a comparison, food prices in Seoul South Korea are the highest in the world or one of the highest while in Japan food prices are still relatively cheaper including supermarket prices.

So even though family, households, and individuals might think food prices have gone up a lot they are no where near the level of increase in Seoul.

Energy and utility prices might now begin to see a sustained decrease as the government might has/have actually curbed the increase in energy prices or been able to maintain a price level that might be affordable for many households.

Article:

Without government efforts to lower prices for electricity, city gas, gasoline and kerosene, the core CPI would have risen around 4 percent in March, according to the ministry.

So-called core-core CPI, excluding both fresh food and energy prices, leaped 3.8 percent.

The BOJ is scheduled to release a fresh outlook report on inflation and economic growth at the end of the policy meeting on April 28. The central bank is considering forecasting the core CPI will rise around 2 percent in fiscal 2025, sources familiar with the matter said earlier.

Ideas:

A 4 percent increase, yes a lot, for some might not be  big deal, but for those on low or fixed incomes it can mean a lot. 

It means of course they now have to limit their spending on other items such as quality food purchases.

Forecasts are nothing more than guess or educated guesses as to what the future might be related to in this case the economy.

But for the average consumer do they really care about next year as they are now focused on what is happening today and can they get through the next month.

Article:

"The underlying price trend is strengthening and households are increasingly feeling it, too," said Saisuke Sakai, a senior economist at Mizuho Research & Technologies.

Mizuho expects the core CPI to continue rising around 3 percent year-on-year in the coming months, projecting that real wages will not turn positive until the latter half of fiscal 2023 despite robust pay hikes promised during annual labor-management negotiations for the year.

Ideas:

Prices are continuing to increase and as such consumers are most likely are going to have to make choices or trade-offs on what they think is important and not important for their weekly and monthly buying needs.

Wage increases most likely were only related to large companies and maybe not even all large companies. So that means maybe most small and medium sized companies were either not able to increase wages and or unwilling to increase wages.

What that means is of course, not all wage earners in Japan didn't get a wage increase. 

So lets say the large companies make-up  10 percent of wage earners in Japan, that means maybe 90 percent of wage earners in Japan didn't see a wage increase which of course might mean consumer spending might not increase that much if at all.

Article:

"While the pace is still limited, price increases are also seen in the services sector, which are also due largely to rising raw material costs. In the longer term, service providers will have to continue coping with labor shortages and pass on higher fixed costs (for securing labor) to consumers," Sakai added.

Financial markets expect the BOJ, which appears in no hurry to raise interest rates, will have to tweak its policy as the side-effects of protracted monetary easing have emerged. Critics see the need to make its goal of attaining 2 percent inflation as soon as possible more flexible.st

Ideas:

The pace or increase in prices might seem limited but tell that to the average family and how much their month energy and food costs have increase this year so far. 

The services sector is in a not so good position as maybe because of the pandemic and having to lay-off or let go a lot of workers they now have a labor shortage and maybe the only way to get them to come back or fill those positions they will have to pay even higher wages to get people to work.

What is maybe happening now. for example in Yokohama, as I survey many hotels, they have increased their rates as maybe a way to make up for lost revenue during the pandemic and or as tourists, domestic and international return they anticipate a surge in demand as usual an increase in hotel rates.

And or course they might have increased their rates to pay for the increase in wages they will need to pay to workers they hire

Article:

Aggressive interest rates hikes by the likes of the U.S. Federal Reserve have cast a pall over the strength of global economic growth, with recent market jitters over U.S. and European banks adding to concerns.

"We expect the effects of the rapid yen depreciation (since last year) to dissipate toward this fall," said Toru Suehiro, chief economist at Daiwa Securities.

Ideas:

 Interest rate increases have both positives and negative effects. Its like taking medicine that is supposed to be good for you but there are maybe some obvious side effects. 

The same with interest rates and the economy. An economy and global economy is make up of many sectors and as such not all sectors respond the same to the interest rates. 

A central bank has to decide the positives and negatives of a key interest rate increase and try to balance out the the rate and other strategy tools and a way to limit the side effects

The Bank of Japan seems to have been very good so far, except for the yen situation which maybe is out of their control as the US rate hike might be too much for the yen variance.

Time will tell if the yen will continue to be weak, and is so, consumers and the domestic economy will have to endure higher prices for the time being. 

Have a nice day and be safe!

Japan Trade Deficit:

 Article Source: https://mainichi.jp/english/articles/20230420/p2g/00m/0bu/022000c

Article:

TOKYO (Kyodo) -- Japan's trade deficit roughly quadrupled to a record 21.73 trillion yen ($160 billion) in fiscal 2022 ended March, as increased energy costs and a weaker yen led imports to grow far more than exports, the Finance Ministry said Thursday.

Imports jumped 32.2 percent from a year earlier to 120.95 trillion yen, while exports increased 15.5 percent to 99.23 trillion yen. Japan remained in the red for a second straight year, with both figures the highest since comparable data became available in fiscal 1979.

Ideas:

Japan might have had an increase in exports which is good but was offset by record setting imports due to the currency variance between the US and and Japan which inflated imports more than usual..

The Bank of Japan's current policy situation is most likely the reason for the currency variance as the US keeps increasing its rate while Japan keeps its rate low.

Japan had trade surplus for many years so if there are a few years of a deficit it might not be that big of deal, at this time.

Article:

The trade deficit of 13.76 trillion yen registered in fiscal 2013 was previously the highest.

Crude oil, coal and liquefied natural gas were among the major items that contributed to the surge in imports.

With the waning of the negative impact of the COVID-19 pandemic, strong overseas demand supported exports of cars, iron and steel, and other items.

Ideas:

Energy costs, for awhile, are most likely going to remain high, which means families and households will continue to have high energy bills unless the government offers subsidies for families.

As long at the global economy continues as is Japanese exports should be strong. But if the global economy and China begin to falter Japan will see a sharp decrease in exports.

While the US economy seems to be strong or fairly strong the same can't be said for the Chinese economy with real-estate market challenges maybe going to affect the overall economy.

Article:

The dollar averaged 135.05 yen in fiscal 2022, sharply up from 111.91 yen in the previous year. The yen's rapid deprecation last year added to the pain for resource-scarce Japan by inflating the import costs.

Japan had a trade surplus of 6.65 trillion with the United States but ran a record deficit of 6.81 trillion yen with China.

The U.S. Federal Reserve has been aggressively raising interest rates to tamp surging inflation, raising concern that it could slow economic growth and reduce shipments from Japan.

Ideas:

Japan is always going to have challenges as its resource-poor country and will always be at the mercy of the yen/dollar exchange rate situation.

Each countries central banks seem to use different strategies to solve it unique economic problems. 

The US seems to think increasing the rate is the best strategy while Japan seems to think keeping the rate low is the best strategy.

But to be fair and honest both strategies don't seem to be working as the inflation in both countries keeps increasing or at least not at a critical point.

Article:

While the end of Beijing's "zero-COVID" policy was viewed as positive for Japan's exports, concern about China's slow growth.

In fiscal 2022, exports to the United States jumped 21.3 percent to a record 18.70 trillion yen, helped by auto demand, while imports from the country grew 26.8 percent to 12.05 trillion yen, also a record, with medicine and coal among major items.

Ideas:

China's situation is never that clear as sometimes we don't know exactly what is happening in China. But there a definite concerns about what is happening with the Chinese economy and its growth.

The US economy, despite the continued inflation situation, is continuing to show strength and not showing signs of slowing down. 

The question maybe should be will it continue to grow in 2023 and will demand continue to be there in 2023 and 2024,

Of course the only challenge with imports from the US is the variance in the US/Japan currency situation which is making imports even more expensive.

Article:

Imports from China increased 19.6 percent to a record 25.33 trillion yen as demand for smartphones, clothing and audio-related parts was strong. Exports to the country, meanwhile, rose 1.3 percent to 18.51 trillion yen, also a record, helped by audiovisual equipment, semiconductors and other electronic parts.

Japan's trade deficit with the European Union stood at 1.77 trillion yen, the 11th straight year of red ink, while the nation eked out a trade surplus of 454.24 billion yen with the rest of Asia, including China, the ministry data showed.

"China-bound exports are expected to recover after struggling during the Lunar New Year holidays (in late January), but demand from the United States and Europe is getting weaker," said Kota Suzuki, an economist at Daiwa Securities.d

Ideas:

Maybe the reason for the continued trade deficit with the EU is the fact that Japanese cars just can't compete with the EU cars and their popularity. Toyota, Nissan, Honda and so maybe just can't compete with BMW, Mercedes and all the other brands that are popular in the EU.

Trade with Asia, as it is, needs to be further expanded to not just China but as much as possible with all Asian countries. 

If Japan is too focused on selling only cars they need to focus on all kinds of products and services.

There is no shortage of Asian tourists who want to come to Japan and buy things, so Japan should take advantage of the fact that in Japan international tourists want things and not just the Chinese who come to Japan in large groups and buy a lot of things. 

Article:

"The value of imports is unlikely to drop sharply, given recent gains in crude oil prices and the weaker yen. So the trade deficit will narrow but only at a moderate pace," Suzuki said.

For March alone, Japan recorded a trade deficit of 754.51 billion yen, after imports grew 7.3 percent and exports increased 4.3 percent.

Ideas:

There are always positives and negatives to trade and in this situation as the yen is weak it of course means exporters can get a lot more revenue for their products. and of course as more and more international tourists come to Japan, they have the benefit of a weak yen which means they can buy even more Japanese products. 

So the Bank of Japan might say, yes there are challenges with the weak yen, but at this time we see more benefits with a weak yen and the growth of the Japanese economy.

Of course the domestic market might not agree as they have to pay higher imports prices because of the weak yen. 

Have a nice day and be safe!

Bank of Japan Forecast:

 Article Source: https://mainichi.jp/english/articles/20230418/p2g/00m/0bu/081000c

Article:

TOKYO (Kyodo) -- The Bank of Japan is considering forecasting consumer prices will rise by around 2 percent in fiscal 2025 from a year earlier in its next price outlook report, to be released after a policy-setting meeting later this month, sources familiar with the matter said Tuesday.

If the tentative forecast is correct, the BOJ will see its 2 percent inflation target achieved about three years after academic Kazuo Ueda became governor. The policy-setting meeting, set to last two days and the first under the new leadership, will take place from April 27.

Ideas:

A 2 percent increase in prices might not be that big of deal for most consumers but then again if its after continual prices increase every quarter it then can become a much challenging situation for consumers.

The low-income consumer will be affected the most as they tend to spend a larger portion of their income on food than do those in higher income brackets.

The 2 percent goal has to be taken with grain of salt, meaning are prices increasing due to consumer spending and consumer demand or are prices increasing due to companies just passing-on their costs to the consumer or the next in the supply chain.

Article:

Excluding volatile fresh food items, Japan's core consumer price index has remained above 2 percent for nearly a year, but the central bank takes the view that its inflation target is yet to be achieved stably because most of the gains seen are attributable to the temporary effects of higher import costs, not strong domestic demand.

The BOJ also considers more robust wage growth to be vital in achieving the inflation target, something that Ueda's predecessor Haruhiko Kuroda did not achieve during his 10-year tenure that ended earlier this month.

Ideas:

Strong domestic demand is always a challenge for the Japanese economy as the Japanese consumer usually is not a big spender like the US consumer. 

And yes, because of the weak yen and the variance between the US currency and the Japanese currency import prices are much higher than what they should be.

And of course the more wage growth there is the better consumers/workers will feel and they might begin to spend more and maybe the Bank of Japan's 2 percent goal will be reached.

There is always the possibility, as companies increase wages, they will pass-on the costs to the next in the supply chain and or the final consumer, which in turn could increase inflation too.

Article:

In the latest outlook report released in January, the BOJ expected core consumer prices to gain by 1.6 percent in fiscal 2023 starting in April, followed by 1.8 percent in fiscal 2024.

Financial markets expect the BOJ to make changes at some point to its program to keep borrowing costs low for businesses and households. It currently sets short-term interest rates at minus 0.1 percent and guides 10-year Japanese government bond yields to around zero percent.

 Ideas:

An increase of 1.6 percent and even an increase of 1.8 is not much but again if inflation increase every  quarter that these rates then inflation can become a challenge for some income groups.

It seems the rates, at the present time, are good for the Japanese economy. But also the BOJ needs to be aware if companies and others begin to get too lazy they might have challenges if they increase the rates in the future.

The idea is companies and others become too dependent of the rates and if the rates are increased they will become too stressed because of the change in rates.

Article:

Ueda has underlined the need to retain its policy of monetary easing, as Japan will likely see its inflation rate undershoot the BOJ's target in fiscal 2023.

During his inaugural press conference after taking up the post on April 9, Ueda pointed to "good" signs of trend inflation picking up and wage growth accelerating, saying that there is a possibility that the inflation goal can be achieved stably and sustainably.

Ideas:

Central banks such as the Bank of Japan don't make sudden or drastic changes. And even if they decide to make changes in for example the key interest rate, they will send out a message and warn the financial markets that they are going to do some specific a.ction so that the markets are not caught off guard.

The question is has the wage growth been enough to get Japan out of the deflation challenge its been in for many years even decades. 

The news seems to say many big companies increased wages but many small and medium sized companies either didn't increase wages or much smaller increases in wages.

This of course is going to create even more income in-quality in Japan but maybe, unfortunately, its inevitable for a market economy.

Have a nice day and be safe!

Bank of Japan:

 Article Source:https://mainichi.jp/english/articles/20230410/p2g/00m/0bu/041000c

Article:

TOKYO (Kyodo) -- The Bank of Japan's monetary easing framework designed to keep borrowing costs extremely low is "appropriate" while its side effects should be kept in check, its new chief Kazuo Ueda said Monday in his first press conference.

Ueda, who took the job a day earlier, suggested that a "broader" review of the BOJ's monetary policy over the past decade and beyond may come, at a time when its dovish stance draws a stark contrast with its global peers.

The BOJ governor said he will strive to complete the central bank's long-sought goal of attaining its 2 percent inflation target, despite it being challenging.

Ideas:

While other economies and central banks, such as the US increase interest rates, its maybe appropriate for Japan that it has kept it rate low and the BOJ knows there are multiple side affects to increasing the rate. 

And at the same time, even as the US continues to increase the rate it really hasn't improved the inflation situation in the US like it is or was supposed to do.

While the Bank of Japan and other central banks might choose different paths to combat inflation they are still trying to solve the central problem of how to lower inflation.

In that way they are not in stark contrast just using different tools to try and do the same thing.

The Bank of Japan's goals of 2 percent inflation if more about consumer demand and consumer spending and not so much about increasing wholesale prices. 

So in this case its  a definite challenge to see if it can increase consumer spending to the 2 percent level.

Article:

"Whether to keep the BOJ's yield curve control program depends on economic, price and financial conditions, and we need to compare the merits with the side effects," said Ueda, who is the first postwar BOJ chief hailing from academia.

"Based on the current conditions, it is appropriate to maintain" the yield curve control program, he said.

On his first business day as governor, Ueda visited Prime Minister Fumio Kishida at his office and agreed that there is no need, "for now," to revise a 2013 joint accord. The agreement has served as the basis for the central bank's monetary easing to achieve its inflation goal.

Ideas:

There are always positives and negatives to any policy or policy action and of course a central bank has to decide do the positives of any action outweigh the negatives and or can the negatives be controlled enough to allow the positive actions work in the economy.

Central banks usually don't make sudden or drastic actions and in this case most likely the Bank of Japan is not going to make any sudden changes to what is doing or planning to do.

In this case also as there is now a new governor in the Bank of Japan the new governor doesn't want to cause a loss of face to the outgoing governor by making drastic changes in policy or policy actions. 

Article:

The BOJ has been forced to ramp up government bond buying to keep short- and long-term interest rates within a target range, with its swollen balance sheet posing a formidable challenge to the central bank when it decides to normalize its policy.

Financial markets expect the yield curve control program to be modified or scrapped under the new leadership.

While the BOJ has yet to attain the 2 percent goal stably, headline inflation has remained above that level for nearly a year. The rise has mainly been driven by higher energy and raw material costs exacerbated by the yen's sharp drop, a byproduct of the central bank's dovish stance.

Ideas:

The short and long term bond program is always a challenge to keep it within the correct range.
Of course a swollen balance sheet is going to post significant challenges for the BOJ in the future as what it is going do to.

But at the same time financial markets should not expect too many changes from the Bank of Japan as most likely its not going to make any big changes anytime soon.

An increase in inflation should not be confused with a natural in increase in prices due to increased demand and consumer spending which has not yet happened and may not happen anytime soon until inflation decreases and or wages increase to the point that they are more that inflation.

Article:

"We would like to see trend inflation heightening a bit more, so the outcome of 'shunto' (corporate wage negotiations) has, so far, been encouraging," Ueda said. "That said, we have to see if this growth will be sustained from the viewpoint of achieving the 2 percent target stably and sustainably."

Tepid wage growth is a major reason Ueda's predecessor, Haruhiko Kuroda, justified the retention of powerful monetary easing.

After meeting with Kishida, Ueda said the two shared the view that Japan is no longer in a state of deflation because of the policy steps taken over the past decade in line with the agreement.

Ideas:

Wage increase has been good so far but more needs to be done especially with small and medium sized companies. Big companies have stepped up and increased wages but small and medium sized companies might not have the resources to increase wages.

Japan might not be in state of deflation now but its not exactly in a state of solid economic growth just yet. 

These wage increases, while good, might be have a lag effect, meaning its going to take some time as workers/wage earners feel the effects of the wage increase sand weigh the difference with the inflation of energy and food costs.

It will be interesting to see how much Golden Week and the upcoming Obon season will have on consumer spending in the economy and how much consumes spend during those two holiday periods.

Article:

Ueda said he and Kishida agreed to keep in close communication and implement policies flexibly depending on economic conditions.

In the accord, the BOJ pledged to attain its 2 percent inflation target "at the earliest possible time," while the government vowed to take steps to promote structural reforms and boost Japan's growth potential.

Critics are calling for a review to make the target more flexible, but Ueda has said he does not see the need to revise the agreement.

Ideas:

Policies always need to be checked and revised as needed depending on economic conditions. But the trick is when and how do to them and financial markets want stability and not too much movement in policy changes or actions.

The  2 percent target all depends on inflation and wage growth and how consumer think or feel about what is happening. There is not going to be much in consumer spending until wage growth is more than inflation and until that time consumers most likely are not going spend like US consumers which tend to spend freely compared to the Japanese.

The Bank of Japan and most central banks don't make sudden or drastic changes. Even when they plan to increase rates they always communicate it to the market to make sure there is no surprise. 

Article:

Ueda took the view that the current policy framework he has inherited from Kuroda is complex, adding that he will try to "untangle" it during his five-year term.

His predecessor's tenure was marked by surprises, ranging from the 2016 introduction of a negative interest rate policy and most recently the December widening of the trade band for 10-year government bond yields.

"If we suddenly realize that 2 percent inflation can be achieved in a sustainable and stable manner, and normalize policy accordingly, this will require big changes, which will also cause financial market and economic disruptions," Ueda said. "We need to be able to make the right judgments in advance."

Ideas:

Most likely what Ueda is really saying is he doesn't want to make any major changes at this time and will take his time to decide just what to change and when.

Ueda is right in that financial markets don't want major changes as they might cause too much harm and so Ueda is not going to do anything to cause any major changes that might affect the markets.

What the Bank of Japan wants or needs is no actions that will cause major economic disruptions. While the Japanese economy is not exactly growing at even 2 or 3 percent, it is a very stable economy with little in terms of economic disruptions other than the ongoing inflation situation.

Article:

Ueda studied economics at the Massachusetts Institute of Technology and taught at the University of Tokyo. As a member of the decision-making board at the BOJ between 1998 and 2005, he witnessed the central bank's foray into uncharted territory with a zero interest rate and quantitative easing.

The first policy-setting meeting is scheduled for April 27 and 28, when the BOJ is scheduled to release new economic and inflation forecasts.

Ideas:

If Ueda studied at MIT that means most likely he studied under some very prominent macro-economic professors who specialized in economic growth and development.

In this case he has a very good background in macro policies as MIT was known for developing economy policy and not just economic theory.

The list of prominent scholars at MIT is too many to mention such as Solow, Krugman, and so on and I will add more names later to the list. 

Article:

New deputy governors Ryozo Himino and Shinichi Uchida also attended the press conference, their first since assuming the posts in March.

Uchida, who served as an executive director under Kuroda, said he will aim achieve the inflation target during his five-year term.

Ideas:

Once again the inflation target will not be met until wage growth is enough to meet the demands of workers.

At the same time there needs to be some sort of income equality among women and men in the workplace as women's wages are far less than men. 

There are many structural changes also that need to take place to make sure the Japanese economy can get back to real sustainable growth in the future. 

Until there there are real structural changes the 2 percent target might not be reached. 

Have a nice day and be safe!