By Anton Bridge and Miho Uranaka <\/p>\n
TOKYO, July 7 (Reuters) – The CEO of Japan’s largest banking group warned that sustained inflation driven by a depreciating yen \u200ccould hit consumer sentiment and the import-dependent country’s economic growth. <\/p>\n
Weak consumption may \u200cderail Prime Minister Sanae Takaichi’s efforts to revive the Japanese economy as the government embarks on an ambitious \u200beconomic programme, which includes investment in growth sectors and a temporary cut in consumption tax on food. <\/p>\n
“I’m extremely troubled by the prospect of a weakened yen leading to widespread, sustained inflation in Japan,” Junichi Hanzawa, chief executive of Mitsubishi UFJ Financial Group, said in an interview \u200cwith Reuters. <\/p>\n
“If price rises exceed \u2060real wages, that will hit consumption. This would be a minus to sustainable economic growth. That’s my greatest concern,” Hanzawa said. <\/p>\n
While the \u2060end of deflation has been a boon for Japanese banks as loan demand for investment has surged, employees’ real wages have been negative for the four years to the end of \u200b2025, labour \u200bministry data showed. <\/p>\n
Japan has spent much of the \u200bpast three decades battling deflation after \u200cthe collapse of its asset bubble in the early 1990s ushered in years of weak growth, stagnant wages and entrenched expectations that prices would remain flat or fall. <\/p>\n
The Bank of Japan raised interest rates to a 31-year high of 1% in June but that did not arrest the yen’s decline. The currency hit a 40-year low of 162.66 \u200cyen against the dollar last week. <\/p>\n
Hanzawa declined to \u200bcomment on the yen’s current level. <\/p>\n
Japan is reliant on \u200bimports for the majority of its \u200bfood and energy. The U.S.-Israeli war on Iran and disruption to \u200cenergy supplies pushed up annual core inflation \u200bin Tokyo in June. <\/p>\n
Prime \u200bMinister Takaichi is known to favour low interest rates that support an expansionary fiscal policy. <\/p>\n
“I think it is extremely important to curb inflation so as to \u200bprevent negative real incomes,” Hanzawa \u200csaid. <\/p>\n
The BOJ has indicated it would continue to raise rates, focusing on \u200bthe risk of inflation deviating upward from its 2% target. <\/p>\n
(Reporting by Anton Bridge \u200band Miho Uranaka; Editing by Jacqueline Wong) <\/p>\n","protected":false},"excerpt":{"rendered":"By Anton Bridge and Miho Uranaka TOKYO, July 7 (Reuters) – The CEO of Japan’s largest banking group…\n","protected":false},"author":2,"featured_media":75998,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[174],"tags":[5034,12190,649,191,189,8,188,190,281,274,1312,358,48854,1203],"class_list":["post-75997","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-consumption-tax","tag-core-inflation","tag-economic-growth","tag-economy","tag-economy-of-japan","tag-japan","tag-japans-economy","tag-japanese-economy","tag-junichi-hanzawa","tag-mitsubishi-ufj-financial-group","tag-real-wages","tag-sanae-takaichi","tag-sustainable-economic-growth","tag-yen"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts\/75997","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/comments?post=75997"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts\/75997\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/media\/75998"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/media?parent=75997"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/categories?post=75997"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/tags?post=75997"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}