Ichida: 2% inflation target runs counter to rise in domestic demand

Japanese Communist Party Secretariat Head Ichida Tadayoshi criticized a 2% inflation target the government and the Bank of Japan announced as running counter to a recovery of the economy driven by consumer spending.

At a press conference on January 22, Ichida said that a decline in domestic demand is causing the current deflationary recession since annual family income on average fell by 1,020,000 yen from its peak in 1997.

Ichida pointed out that the government and the BOJ say they will continue to adopt monetary easing measures until the 2% target is achieved but no matter how much money they supply, it would be ineffective.

He also pointed out that this policy may lead to a steep rise in prices.

Ichida argued that the use of just a small portion of the huge internal reserves accumulated in large corporations can increase overall wages and that the planned increase in the consumption tax rate should be cancelled as it impedes the expansion of domestic demand.

Earlier this day, the government and the BOJ announced as a joint statement that they decided to implement a 2% inflation target and an open-end further easing of monetary supply until the target is achieved.

Though a specific date to meet the target is uncertain, the BOJ said that they will strive to realize that goal as soon as possible.