Meeting of the Council on Economic and Fiscal Policy

On March 10, 2025, Prime Minister Ishiba held the second meeting of the Council on Economic and Fiscal Policy in 2025 at the Prime Minister’s Office.

At the meeting, the participants engaged in discussions on macroeconomic management (intensive discussions on monetary policy, commodity prices, and other matters) and held the second special session regarding wage increases.

Following the discussion, the Prime Minister said:

“Today we held discussions on macroeconomic management and the second special session regarding wage increases.

The Japanese economy has been moving toward a growth-oriented economy, with the inflation rate rising and the long-term interest rate edging up now.

In the informal Cabinet meeting held last month on February 4, I instructed the relevant ministers to swiftly and effectively implement measures to combat rising prices, including grants to local regions for prioritized assistance tailored to the actual conditions surrounding these regions and the utilization of the Government’s rice stockpile. We will continue to closely monitor price trends and the impact of rising prices on households and business activities and make the most of these programs to thoroughly protect people’s lives and business activities from high prices.

On top of it, we will take policy responses focused on improving Japan’s potential growth rate, while making the economy fully prepared for a sharp rise in the long-term interest rate and growing global uncertainty, among others.

In the special session regarding wage increases, we received the following opinions: although Japan has seen only small fluctuations in prices and wages for years, rising inflation expectations among consumers and wage increases on the back of labor shortages have started a virtuous cycle that leads to a rise both in prices and wages over the past three years; this year’s spring wage negotiations, the third since the cycle began, are important to make such favorable cycle take hold; the Government’s increased predictability in minimum wage hikes will support the overall pay raise; and a functioning pricing mechanism for commodity prices, wages, and interest rates would facilitate efficient resource allocation in the market, leading to improved productivity.

Based on the idea that ‘it is wage increases that form the cornerstone for our growth strategy,’ our Administration will make strong momentum take root and expand domestic investments. At the same time, we will dispel the deflation mindset that has been ingrained for years and seek to increase people’s incomes and the productivity of the entire economy.

To this end, I request both labor and management to work together to realize a substantial wage increase in this year’s spring wage negotiations, by bearing an across-the-board pay increase in mind and building on last year’s momentum resulting in the highest hike in 33 years. The Government, for its part, will draw up measures to raise minimum wages.

In order to restore economic dynamism with wage increases as a starting point, efforts to enhance productivity and conduct labor market reforms are also important. We will continue to deepen discussions on these issues in the run-up to the formulation of this year’s Big-Boned Policy (Basic Policy on Economic and Fiscal Management and Reform). That is all from me.”