Government vs BoJ? Japan’s Kiuchi Offers Softer View on Inflation Risks

Japan’s economy minister Minoru Kiuchi pushed back against the Bank of Japan’s more hawkish inflation warnings, saying the recent rise in prices still looks moderate and that energy-cost pass-through from Middle East tensions has been limited so far. He highlighted June CPI at 1.7% y/y and pointed to government fuel subsidies and expected real wage growth of nearly 1% this fiscal year as buffers for households. The comments suggest Tokyo prefers a cautious, gradual normalization path even after the BoJ raised rates to 1% in June. For markets, the remarks may temper expectations for aggressive near-term tightening and keep the yen and Japanese equities sensitive to future inflation and wage data.