The Minister of Finance warns from Japan after shrinkage

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The country’s finance minister has warned that Japan has not yet been shaken, despite years of constantly increasing the prices of consumers and the largest round of annual wage increases in three decades.

Catsonobo Kato’s explicit evaluation comes in an interview with the Financial Times for 15 months in Japan BankThe efforts of “normalizing” the economy and gradually returning positive interest rates, after a long battle in the century to direct the country away from low prices.

Kato confessed to that Japan He was suffering from high prices and other trends appear to be positive, but it said that the government could only announce a victory over deflation when he did not see any possibility of slipping.

“I think we need to judge carefully whether Japan has separated from contraction not only by looking at consumer prices, but looking at basic and rear prices in a comprehensive way … It is our rule at the present time that did not overcome the contraction,” Cato said.

The minister’s comments are frequenting some economists’ fears that prices rise significantly, as they are largely the type of “wrong” inflation: driven by the weak and the costs of high commodities instead of a virtuous cycle of increased wages and demand for consumer.

The main inflation remained higher than the goal of BOJ, which is 2 percent for 35 consecutive months, and the prices of consumers, except for fresh food, increased by 3 percent in February of the previous year.

Last Friday, the Japanese Union Union, which claims that 7MN workers, said that negotiations resulted in the average gains in wages of 5.46 percent, which he said was the highest salary in 33 years.

But the growth of wages is real, real, consumer’s confidence remained soft, and according to the TEIKOKU DATABANT research group, companies in February were passing a smaller rate of their increasing costs for consumers than last July.

During the contraction period, Kato said, there was no movement in prices, wages or interest rates – a group that suppressed economic growth and preventing the country from achieving its potential.

“It was a very slow position,” Kato said. “However, things are now changing. We now see high prices, increased wages, and in terms of monetary policies, BOJ is now looking while the position of the optimal monetary policy will be for Japan. So we now see the signs of change and normalization.”

Kato spoke to FT shortly after Boj selecting Leave the short -term policy average waiting Last week, due to the huge uncertainty created by the tariff threats of US President Donald Trump and the increasing risks of the global economic image.

The BOJ’s normalization included negative rates in early 2024, followed by a slight rise in July that year. In January 2025, The Boj Rising rates to 0.5 percent – The highest level in 17 years. Many economists expect at least one height this year.

Kato said that the process of moving to an ordinary economy, and relied on ensuring an increase in wages in increasing prices in the long run.

He said it is encouraging that large companies raise wages, but the real challenge is to ensure that small and medium -sized companies in Japan were able to transfer the high costs of employment and inputs to customers.

Although the level of consumer inflation appears to be excluded a return to contraction, Kato’s comments reflect the fact that Japan has not yet had the type of inflation it wants.

“It is difficult to feel very confident in it,” said Angrick.

He added that the shock of the offer will eventually fade, and after that the strongest local demand can maintain inflation on the target.

“But the local demand is very weak. Consumer spending has been fixed over the past three years. CEPEX spending is walking in the water. Labor markets are not exactly as they seem,” said Angrick, who is expected to drop inflation to less than 2 percent by 2026.