During a meeting with bank managers today, Bank of Japan Governor Masaaki Shirakawa said that the country’s central bank will persist in relaxing monetary conditions while it continues to make efforts to try to pull the country out of deflation. While prices remain flat, showing little progress, he clarified that the bank “recognizes it is crucial for the economy to overcome deflation as soon as possible and resume a sustainable growth path with price stability.”
As of late, the yen has fallen in comparison to the U.S. dollar and the euro. This slide began prior to Shinzo Abe becoming prime minister. It is worth noting that despite the bank’s supposedly independent status, Abe, even before sitting as prime minister, has been lobbying for aggressive action from the central bank and demanding that it meet an inflation target of about 2 percent. He repeated this call when he announced a 20 trillion Yen economic stimulus package last Friday.
While some benefit was gained from the Yen’s fall since April 2011, in that it helped relieve the pressure on producers who have suffered in competitiveness and profitability partly due to the currency’s prolonged appreciation, many businesses are concerned that the yen might fall too far, thereby resulting to uncertainties in the Japanese economy and raising costs for imported fuel and commodities.
[via The Sentinel]
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