| JACKSON HOLE, Wyo.
JACKSON HOLE, Wyo. Aug 23 Japan's labor market
is showing "significant improvement," though it still faces
challenges including a large share of part-time workers in the
service sector, Bank of Japan Governor Haruhiko Kuroda said on
Wage growth is critical to reverse deflation and for that to
happen "it is necessary to have some kind of coordinated
mechanism," Kuroda said at a central banking conference here,
adding that the Bank of Japan's quantitative easing stimulus is
helping Japan escape from a deflationary cycle of falling wages
"The Bank of Japan's price stability target can serve as a
benchmark for wage setting," he added, speaking on a panel
alongside central bankers from Brazil and Britain. "Once the
bank has succeeded in firmly anchoring (inflation) expectations
at 2 percent this could provide the basis on which wage
negotiations are conducted."
The Bank of Japan deployed an intense burst of monetary
stimulus last April, when it pledged to double its money base
with the quantitative easing program of asset purchases. Kuroda
wants to accelerate consumer inflation to 2 percent in roughly
two years. Japan has been mired in 15 years of grinding
The program was initially successful, with consumer
inflation, when excluding the effect from a sales tax hike in
April, having recently hit 1.3 percent. Inflation is expected to
slow in coming months as the boost from a weak yen on import
costs begins to fade.
On Saturday, Kuroda said reaching the 2 percent inflation
target is critical in getting firms to raise wages and,
ultimately, reverse deflation. He added that Japan needs a
favorable work environment for woman and older workers to help
counter its declining labor force.
(Writing by Jonathan Spicer in Jackson Hole; Editing by Paul