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.
According to the London-based research house, Japan’s burgeoning debt pile poses a major risk to its finances, and the central bank’s inflation target falls well short of what is required to substantially reduce it.
“Higher inflation is the only plausible answer to Japan’s fiscal problems, but even achieving the current target of 2 percent may not be enough,” Julian Jessop, chief global economist at Capital Economics said in a note.
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