Japan's risk of spurring inflation without boosting the nation's growth potential is raising the stakes for Prime Minister Shinzo Abe's next round of economic restructuring measures, due in June.
An economy "with low real growth rates under mild inflation" is possible, should the government fail to deliver, Bank of Japan Deputy Gov. Kikuo Iwata said Monday.
Investors are looking for lower corporate taxes, labor-market flexibility and progress on a U.S.-led trade pact as Abe prepares for the next phase of the so-called "third arrow" of "Abenomics," economic restructuring to boost long-term growth prospects. Iwata's comments built on Gov. Haruhiko Kuroda's calls for the government and companies to do more to boost the nation's outlook.