HIROSHIMA, Dec 5 - Toyoaki Nakamura, a board member of the Bank of Japan, emphasized the need for a cautious approach regarding interest rate increases. Speaking to business leaders in Hiroshima, he noted that smaller firms have not yet achieved sufficient profitability to manage higher borrowing costs.
Nakamura expressed skepticism about the sustainability of wage growth, indicating that inflation might fall short of the Bank's 2% target starting in fiscal 2025. He pointed out that consumer spending is losing momentum as households become more budget-conscious due to rising prices.
He highlighted that many smaller companies are struggling to generate adequate profits to support wage increases. Nakamura concluded that the central bank is at a critical juncture, requiring careful analysis of economic data to adjust monetary support based on economic improvements.