In many ways, the Japanese economy seemed to go back time.
Inflation and wages have returned to places in the early 1990s, shortly before the stagnation of price deflation and economic stagnation, which became known as “lost several decades.”
As a result, the Bank of Japan increased interest rates on a quarter point on Friday to 0.5 %.
The increase on Friday has since brought interest rates to their highest level since then. 2008,, It was less than a year, and it was a pace of policy that was not seen in Japan since 1989. After raising the price in March and July last year, the Bank of Japan had been stable at a recent policy meeting because the Bank of Japan had been waiting to see if the inauguration ceremony could be seen. The market of President Trump rattles.
Japan is as usual as other major central banks are moving to reduce the high interest rates used to suppress inflation. After encouraging the rise in prices, the Bank of Japan is now increasing interest rates beyond zero.
Economists say that Japan has begun to resemble the conventional economy with the return of inflation and aggressive interest rates.
Leaving from the deflation mindset -Why do you buy something today when it's cheaper than tomorrow? Rising interest rates usually cools the economy by making borrowing more expensive, but economists suggest that tightening monetary policies may be useful in Japan in Japan. The higher prices can maintain a long -standing borrowing of “zombies” companies and create a business that focuses on good growth in order to use the limited labor supply in Japan.
“There are many inefficient fields, and inflation worlds will publish them,” said Fujita, Chief Economist for JP Morgan Securities. The rise in interest rates is in some ways to “open the Pandora box”, “I believe that Japan will eventually have more productive new economic growth in Japan.” I did it.
However, for now, it is not only inflation, basic salary, and stock prices that have returned to the early 1990s. Japan is working on the whole economy, which has hardly grown in the past 30 years. In 2024, Japan's gross domestic production, adjusted in line with inflation, is expected to increase by about one -quarter since 1994, but the economy has doubled in the same period in the United States.
In Japan, inflation began to be cooled in the early 1990s after the huge real estate and stock market bubbles collapsed. By the late 1990s, Japan fell into a full -fledged deflation, so that companies and consumers have a wide and sustainable decline in prices and services, and to delay large -scale investment and purchase.
The Bank of Japan has begun to purchase more government bonds and corporate debt to try to separate Japan from this cycle of prices, wages, expenditures, wages and expenditures. The market flooded the market with the money he wanted to spend and lend. In 1999, the Central Bank adopted a zero profit margin policy, and in 2016, we went further with negative interest rates. However, even these intense tactics rarely spurred economic activities.
For the past few years, Japanese officials have gained the opportunity to change import costs into permanent inflation, as the pandemic supply chain has lurked, and the price around the world has soared.
Instead of raising prices to reduce prices such as the federal preparation system and virtually all major central banks in the world, Japan continued to commit to the very high price. In hopes of raising salaries and creating an increase in inflation, authorities encouraged companies to take over higher imports and raise their wages.
The cycle looks like kicking the gear. As of last month, inflation in Japan has exceeded 2 % of the Bank of Japan's 2 % for 33 consecutive months, and in December, the consumer price of the core has risen by 3 %. The basic salary in recent months has accelerated to a new height since the 1990s. During the labor negotiations in the spring of last year, known as SHUNTO, Japan's largest business group agreed to increase the largest wage since 1991.
Societe Generation wrote in a recent report that “inflation is finally embedded in the economy,” because the price rise is spreading to domestic industries such as services beyond imports. “It seems that Japan seems to have decided on deflation for 30 years for more than two years,” declared French Bank.
Nevertheless, the remaining concern is whether it can reflect the Japanese economy and help shake the country over a delicate long -term economic growth. It is unknown whether the population of Japan is declining, the productivity is delayed, and the number of wages has increased to pay expenditures as households face higher prices.
Inflation has surpassed wage growth over the past three years, so spending in Japan remains relatively weak. Private consumption, which consists of most of Japan's gross domestic production, was featured in the recent quarter, after a long -term slump that grew over the last four quarters.
The International Currency Fund estimates in this month's report that the Japanese economy has reduced 0.2 % in 2024. We predict 1.1 % of this year's country. It has increased 2.7 % in the United States.
This spring's labor negotiations are likely to repeated recorded salaries in the past few years, while recent data led by Japan's largest company, “Wage in the past,” It suggests that it will not be converted to improvement, “said Stefan Angrick. , In charge of Nippon Economics in Moody's analysis.
“Wage growth lacks vitality,” said Anglick. “It suggests that the family budget will be nervous in early 2025,” in combination with the sticky inflation.
