Japanese Government pressures Central Bank on Deflation

Japanese Finance Minister Naoto Kan on Monday exerted new pressure on Japan’s central bank to act more quickly to defeat deflation, saying he wants the falling price trend to end this year.

“Two or three years is too long. If possible, I hope that the consumer price index turns positive by the end of this year,” Mr. Kan told a parliament session.

[mserve id=”Central_Bank_BOJ.jpeg” align=”left” width=”400″ caption=”Bank of Japan” alt=”Central Bank of Japan BOJ” title=”Bank of Japan”]

His remarks were the first mention by the government of a time frame for trying to lift the country out of deflation, though he later slightly sugar-coated his comments by saying that the goal partly reflected his own “wishful thinking.”

Still, his stance suggests that the government could start calling for some new monetary easing action later this year from the Bank of Japan, which itself forecasts that weak domestic demand will mean that deflation will continue through the fiscal year ending in March 2012.


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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza