A professor at the University of Tokyo and a leading expert on prices said， “I cannot understand the interest rate hike at all． The Bank of Japan has strayed from basic economics．”
Leading price researcher warns that the Bank of Japan’s additional interest rate hike is “completely incomprehensible,” and “a deviation from basic economics”
Interview with Professor Watanabe Tsutomu, Graduate School of Economics, University of Tokyo
Regarding the Bank of Japan’s additional interest rate hike on July 31, Professor Watanabe Tsutomu, a leading price researcher at the University of Tokyo, harshly criticized it, saying, “Even before we can consider whether the timing of the interest rate hike was appropriate, it is completely incomprehensible from the perspective of basic economics.” We asked him about his true intentions and the impact that additional interest rate hikes will have on future prices. (Interviewer: Yasutaka Nagayoshi, Diamond Editorial Department) Weaker-than-expected consumption and the additional interest rate hikes on prices are completely incomprehensible –In an interview published in December 2023 (“How high will prices rise in 2024? A leading price researcher predicts the rate of increase”), it was predicted that the rate of increase in the prices of goods will slow down in 2024, while the prices of services will continue to rise. Now that we are in August, how do you view domestic prices? As expected, the rate of growth in commodity prices is declining. However, although the yen has weakened more than expected this year, it is somewhat surprising that prices of goods have not risen. Even more serious is the price of the service. As of December 2011, we expected service prices to increase in 2024, but in reality the rate of increase has slowed. This is something that I didn’t expect. This is despite the fact that the wage increase rate in the spring labor offensive was higher than expected. Overall, my current understanding is that prices are weaker than expected at the end of 2023. –There were two factors that caused prices to rise: higher-than-expected wage increases and a weaker yen. So why are prices still weaker than expected? Looking at the POS data, we can see that there have been an increasing number of special sales since the beginning of this year. It may be that an increasing number of stores want to raise prices but are unable to fully pass on the impact of the weak yen to the higher prices. Stores probably believe that consumers are still tight on cash. A similar phenomenon can be observed with service prices from credit card transaction data. The bottom line is that consumers have less money to spend on goods and services. The high wage increases achieved during the spring labor offensive were groundbreaking, but they have still not been able to support consumption. Questions are being raised as to whether the wage increase rate in this year’s spring labor offensive, which was thought to be at a high level, was actually sufficient. Source below.
Well, it’s the Finance Ministry that raised taxes and tightened credit during times of deflation, and then, because tax revenues increased during times of inflation, carried out massive fiscal investments under the guise of a plan to reshape the archipelago, causing wild inflation. No wonder.
This guy just doesn’t understand. Economics is a living thing. People who cling to their desks at Tokyo University don’t understand economics. Most university professors trade stocks, so they’re just blaming them lol.
>>28 The idea that consumption is good, the theoretical correctness of the welfare state, the functioning of the free market, etc. have all been useful in the past. They just aren’t always correct at all times and in all places.
This guy is an oddball who makes the ridiculous assumption that “young people will become the core of the economy in the future,” so it’s best not to take him seriously.
If economics is an academic field, then instead of just insulting those who disagree with your arguments, there must be some formula that can accurately predict what the Nikkei average will be after the afternoon session closes tomorrow, lol.
>>44 A consumption tax is effective, it would be better to have a flat 10% tax with no exceptions. In Japan, the consumption tax is a tax that can be collected from retired people, who make up 30% of the population, people on welfare, hikikomori NEETs, and bad foreigners who completely ignore the government.
Prices are still too low But if they go up any more than they are now I won’t be able to buy them Or rather, because prices are so high I try not to buy unnecessary things.
>>56 Salaries are too low Because of this, inflationary pressures are rising but they can’t be raised In this situation, the Bank of Japan is trying to raise interest rates to further suppress salary increases.
It’s fine to raise interest rates and normalize the financial system, but unless the market is factored in beforehand, we’ll see a major crash like the last time.
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