At the annual convention of Prime Minister Fumio Kishida’s ruling Liberal Democratic Party, Masakazu Tokura, chairman of Japan’s largest business lobby, the Japan Business Federation (Keidanren), expressed optimism on Sunday regarding the government’s efforts under Kishida’s leadership to effectively tackle Japan’s long-standing deflationary trend.
Tokura highlighted the positive trajectory of Japan’s economy, attributing it to robust wage growth. He emphasized the importance of collective action to make significant strides this year in overcoming the persistent deflation that has persisted for three decades.
Tokura committed to collaborating with the government and the Liberal Democratic Party (LDP) to bolster the business sector.
His comments followed the recent announcement by the Japanese Trade Union Confederation (Rengo) of significant wage increases averaging 5.28% in negotiations between domestic companies and labor unions. This marks the most substantial rise in wages in over 30 years.
Kishida’s government has been deliberating whether to officially declare an end to deflation, given the recent surge in profits among Japanese companies. In 2023, core consumer prices in Japan, excluding volatile fresh food items, experienced a notable increase of 3.1%, marking the fastest growth in 41 years.
Sources familiar with the matter have indicated that the Bank of Japan is poised to lift negative interest rates at its upcoming two-day monetary policy meeting, scheduled through Tuesday. If implemented, this move would mark the first interest rate hike in 17 years, signaling a departure from years of unconventional monetary easing measures.
