Breaking News
Investing Pro 0
🚨 Our Pro Data Reveals the True Winner of Earnings Season Access Data

BOJ's Wakatabe warns risk of 'Japanification' not gone yet

Economy Dec 04, 2022 03:40AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Deputy Governor at the Bank of Japan, Masazumi Wakatabe, speaks at a European Financial Forum event in Dublin, Ireland February 13, 2019. REUTERS/Clodagh Kilcoyne/File Photo

TOKYO (Reuters) - Even as cost-push factors boost inflation, global central banks must be vigilant to the risk of "Japanification", in which their economies face prolonged low inflation and stagnation, said Bank of Japan (BOJ) Deputy Governor Masazumi Wakatabe.

Various structural factors could weigh on the neutral rate, or the rate at which monetary policy is neither stimulating nor restricting growth, across the globe, he said.

That means the main challenge for central banks would be to effectively push down real interest rates to reflate their economies, Wakatabe told an academic conference, according to a text of his speech released on Saturday.

"When looking at history, the mild inflation regime has not ended and the potential danger of prolonged economic stagnation, or 'Japanification', has not been dispelled," he said.

"What Japan's long experience with deflation shows is that it's quite hard to eradicate fears of deflation," said Wakatabe, who is known as a vocal advocate of aggressive monetary easing.

BOJ Governor Haruhiko Kuroda deployed a massive asset-buying programme in 2013 to pull Japan out of nearly two decades of deflation, which was blamed for prolonging its economic stagnation because firms and households hoarded cash instead of spending it.

After heavy money printing failed to fire up inflation to a 2% target, the BOJ shifted in 2016 to a policy targeting interest rates. It continues to maintain ultra-low rates, even as rising raw material costs push inflation above the target.

Wakatabe, whose five-year term as deputy governor ends in March, has consistently stressed the need to keep monetary policy ultra-loose to put a sustained end to deflation.

BOJ's Wakatabe warns risk of 'Japanification' not gone yet
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email