http://www.economist.com/news/finance-and-economics/21573133-shinzo-abe-wakes-up-political-risk-higher-prices-without-higher
This article discusses the efforts of the Japanese government to reduce deflationary pressures in the country and for the central bank to meet its inflation target of 2%. However, for this to work appropriately, firms must raise the pay for their workers - something that has not happened in Japan recently. It is likely that firms will hold back on raises until they are confident that the growth in Japan is sustainable.
In addition, the government needs to be careful that the required inflation be induced as demand-pull inflation as opposed to cost-push inflation. As the article notes, reflationary growth policies are popular to the public but not if their wages do not rise with prices soon enough.
This article discusses the efforts of the Japanese government to reduce deflationary pressures in the country and for the central bank to meet its inflation target of 2%. However, for this to work appropriately, firms must raise the pay for their workers - something that has not happened in Japan recently. It is likely that firms will hold back on raises until they are confident that the growth in Japan is sustainable.
In addition, the government needs to be careful that the required inflation be induced as demand-pull inflation as opposed to cost-push inflation. As the article notes, reflationary growth policies are popular to the public but not if their wages do not rise with prices soon enough.
I think that the Bank Of Japan needs to develop and make it clear to the public a anti-deflationary monetary policy suggestion, and it shouldn't all just be about quantitative easing such as the ones that have newly been implementes but they should clearly set goals to achieve their inflation target of 2%. Their new intensified purchase of government bonds isn't enough.
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