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Wage growth too low to sustain higher inflation

There’s little reason to expect above-target inflation to be sustained in Japan. Wage growth remains far below the levels seen in other developed economies and remains far too low to generate second-round inflationary pressures. With Governor Ueda downplaying the recent acceleration in the Bank’s underlying measures of inflation, the risk that intensifying price pressures over the short-term will force a pivot away from ultra-easy policy is low.

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