Even if Japanese policy makers manage to pull off 2 percent inflation within their two year target, it may not be enough to save the struggling economy, Capital Economics has warned.
Japanese policy makers have this year embarked on an ambitious plan to overhaul the economy, which for decades has been dogged by high levels of public debt and deflation. The three-pronged strategy has involved aggressive monetary easing, along with fiscal stimulus and structural reform.
So far, Prime Minister Shinzo Abe’s plan does seem to be gaining traction. Gross domestic product rose an annualized 3.8 percent in the second quarter of 2013, following a 4.1 percent rise in the first quarter.
Meanwhile, Japan’s core consumer price index (CPI) climbed 0.7 percent on year in September, the fourth consecutive monthly rise.