Japan’s Economy Inflating

Haruhiko Kuroda had recently become the Bank Of Japan’s new governor and he  had promised to end Japan’s long and debilitating period of deflation. It turns out that he delivered on his purpose as the nation’s central bank announced that it would double the amount of money in circulation in an attempt to increase annual inflation by 2 percent. In addition, the central bank has stated that it is aggressively buying longer term bonds and aims to double its government bond holdings within two years.

Japan’s Prime Minister had been focusing so much on beating inflation in his economic policies that the pressure became unbearable for Bank of Japan’s previous governor, Masaaki Shirakawa. After he resigned and stepped down, Mr. Kuroda was appointed, who also shared the Prime Minister’s goals. As the new governor, Mr. Kuroda’s aggressiveness far surpassed his predecessors’ and he blamed them for being afraid of runaway inflation and for being too eager to pull back at the first sign of higher inflation. He compares previous policies as baby steps and remarks “Incremental steps of the kind we’ve seen so far weren’t going to get us out of deflation, I’m certain we have now adapted all policies we can think of to meet the 2 percent price target,” he said. Plus, according to Masaaki Kanno, economist at JPMorgan Securities Japan“Kuroda did it,” and  “This is a historical change in the B.O.J.’s policy.”

Written by Jon Luciano



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