Bank of Japan member Nakamura: I am not confident about the sustainability of wage and inflation growth.

During his talk on Thursday, Bank of Japan board member Toyoaki Nakamura stated that while he is not against raising interest rates, he believes that the decision should rely more on incoming data.

He pointed out that despite the significant progress the Bank of Japan has made recently regarding inflation, he is still personally uncertain about the sustainability of wage growth and maintaining the inflation rate at the 2% target in a sustainable manner.

Nakamura’s main statements were as follows:

I believe that the Bank of Japan's decision should primarily depend on data.

We are in a critical phase where we need to verify a lot of data and cautiously adjust the degree of monetary support according to improvements in the economy.

I personally see a possibility that inflation may fail to reach the Bank of Japan's target of 2% from the fiscal year 2025 and beyond.

Japan's economy is recovering moderately despite showing some signs of weakness.

My growth forecasts are below average due to the likelihood that consumers may hesitate to spend, and capital expenditure may be deferred.

Japan's consumption lacks momentum.

The Japanese economy has not yet moved onto the right path toward stable growth.

Structural changes in Japan’s economy require inflation to consistently and sustainably reach 2%, which I believe will take a considerable amount of time.

The accommodative monetary policy will be adjusted gradually, as the economy is expected to trend towards the desired growth path.

The Japanese economy is still in a recovery phase and has not yet entered an expansion phase.

We should not have any preconceived notions about when to raise interest rates.

There will be plenty of data released before the Bank of Japan's meeting in December, including the Tankan economic report, so we want to scrutinize it before deciding whether raising interest rates now would be a suitable move.

The profitability of small businesses, the transfer of high costs to consumers, the progress made in capital spending and wage increases, and household spending are among the key factors I will consider when making a decision on interest rates.

There are increasing hopes for a soft landing of the US economy, but there are clear signs of an economic slowdown.