Shinzo Abe, the Japanese prime minister, said the Bank of Japan (BoJ) must set a 2 per cent inflation target and make it a medium-term, not long-term, goal.
He said the move was needed to show markets it was determined to pursue bold monetary easing to end nearly two decades of deflation.
The government is negotiating with the BoJ to issue a joint statement this month to make the central bank accountable for achieving 2 per cent inflation, double its current price goal.
"The BoJ basically says it sees 1 per cent inflation as a loose goal. That doesn't show it's responsible to achieve it and doesn't show its strong determination," Mr Abe told the public broadcaster NHK yesterday.
"The statement must say clearly that 2 per cent is the target. That would lead to fundamental changes" in the way it guides policy, he said.
The BoJ set its current 1 per cent inflation target in February and eased monetary policy five times last year.
Japan is stuck in its fourth recession since 2000 and its export-reliant economy is suffering from a strong yen.
Mr Abe, who won a landslide election last month, has piled pressure on the BoJ for bolder efforts to beat deflation, threatening to revise a law guaranteeing its independence on monetary policy if his demands are not met.
Under intense pressure, the central bank will consider easing monetary policy at its rate review next Monday and Tuesday and respond to Mr Abe's calls to double its inflation target, sources have told Reuters.
In the joint statement, likely to be released on Tuesday, the BoJ wants to describe the new target as a long-term goal without setting a specific deadline, to leave itself increased flexibility in guiding future monetary policy.
Mr Abe, however, warned that making 2 per cent inflation a "long-term goal" wasn't good enough.
"That's too long. It should be a medium-term one. Otherwise markets won't react," he said.
* with Reuters
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
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2020 Oscars winners: in numbers
- Parasite – 4
- 1917– 3
- Ford v Ferrari – 2
- Joker – 2
- Once Upon a Time ... in Hollywood – 2
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- Bombshell – 1
- Hair Love – 1
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- Judy – 1
- Little Women – 1
- Learning to Skateboard in a Warzone (If You're a Girl) – 1
- Marriage Story – 1
- Rocketman – 1
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