politics

Abe defends BOJ's policy

8 Comments
By Leika Kihara and Stanley White

Prime Minister Shinzo Abe has praised the Bank of Japan's ultra-loose monetary policy for helping create jobs, suggesting the government wasn't unduly worried that inflation remains distant from the central bank's 2 percent target.

Abe said the government "accepts" the explanation given by the BOJ on why inflation has failed to hit its target, stressing the economy would have been in much worse state without the central bank's stimulus program.

"What's most important is what is happening to the economy as a result of the BOJ's target, which is that more jobs were created," Abe told an opposition lawmaker, who criticized the central bank for failing to drive up inflation.

Abe hand-picked BOJ Gov Haruhiko Kuroda in 2013 to deploy a heavy asset-buying program aimed at eradicating deflation and accelerating inflation to its 2 percent target.

The economy staged a recovery but inflation remains nowhere near the BOJ's goal despite six years of money printing, putting the premier's "Abenomics" stimulus policies under fire.

The BOJ has blamed falling oil prices and the Japanese public's sticky deflationary mindset for delaying achievement of its price target.

Kuroda defended his policy, saying that Japan was not alone among advanced economies to see inflation hurt by factors beyond the central banks' control such as sliding oil prices.

"Expanding base money alone won't immediately have an effect on the economy," Kuroda said.

"With huge expansion of base money, central banks can push down real interest rates and bank lending rates, which in turn would stimulate the economy," he said. "This is what happened in the past six years."

The BOJ kept monetary policy steady last month but cut its inflation forecasts and warned of growing risks to the economy from trade protectionism and soft global demand.

Annual core consumer inflation slowed to a seven-month low of 0.7 percent in December, data showed last month, a further sign of the growing challenge faced by the BOJ.

© (c) Copyright Thomson Reuters 2019.

©2019 GPlusMedia Inc.

8 Comments
Login to comment

The BOJ has blamed falling oil prices and the Japanese public's sticky deflationary mindset for delaying achievement of its price target.

Yeah, right. Cutting workers' salaries year after year - which is what Japanese employers did -- for over a decade after the bubble burst is what created and established the "deflationary mindset." And now, we're trapped, because the same companies are choosing to hoard the windfall of the highest corporate profits in the nation's history rather than pay substantial raises despite a severe labor short.

Why are the pundits so reluctant to put blame where blame is due? I guess they're employed by the same billionaires who are the real culprits.

8 ( +9 / -1 )

"What's most important is what is happening to the economy as a result of the BOJ's target, which is that more jobs were created,"

Wow! Normally I am Abe's biggest critic, but on this specific point he is at least partially correct: it is indeed a good thing that jobs were created. I don't think this job creation is specifically a result of the BOJ's inflation target; I think it happened in spite of that, but it is heartening to see an LDP politician move away from the nonsensical, working-class-destroying "inflation-is-good" propaganda that they and the BOJ have been foisting on us for the last six years.

I still can't believe that the BOJ is claiming that falling oil prices can be anything other than a good thing. Cheap energy is the most important driver of economic growth. Yet Kuroda would prefer to see oil prices skyrocket 2008-style so that consumer prices can also shoot upward and devalue the currency that his country has run up huge debts denominated in. This would be a total disaster for the millions of Japanese people who own bonds and are owed these debts.

4 ( +4 / -0 )

He failed again at one of his stated goals.

5 ( +5 / -0 )

The tax break should have been conditional...given based on improvements in the salaries of the majority of their workers.

3 ( +4 / -1 )

"What's most important is what is happening to the economy as a result of the BOJ's target, which is that more jobs were created," Abe told an opposition lawmaker, who criticized the central bank for failing to drive up inflation.

This statenent shows very very clearly just how out of touch these cronies are. Salaries have decreased, but taxes and prices have increased. Yet, they wonder why there is no inflation? The Japanese economy is doomed and if you have the chance to get out of Japan, do it as quickly as you can before you fall into the save financial ruin as the rest of the country.

3 ( +3 / -0 )

Does really Japan need more jobs?

I thought the labor force was shrinking.

I believe Japan need more higher productivity jobs with higher pay instead.

1 ( +1 / -0 )

When prices increase but wages do not then inflation is not likely.

Kuroda and Abe don’t seem to grasp the most simple economic premise...

1 ( +1 / -0 )

Seems to be defending quite a lot lately, might be time for an overseas trip.

0 ( +0 / -0 )

Login to leave a comment

Facebook users

Use your Facebook account to login or register with JapanToday. By doing so, you will also receive an email inviting you to receive our news alerts.

Facebook Connect

Login with your JapanToday account

User registration

Articles, Offers & Useful Resources

A mix of what's trending on our other sites