Weekend Economists Silent Night Christmas Eve 2014

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38. Kuroda Calls on Japan Inc to Embrace Shift to Inflation: Economy

http://www.bloomberg.com/news/2014-12-25/boj-s-kuroda-calls-on-japan-inc-to-embrace-shift-to-inflation.html

Bank of Japan chief Haruhiko Kuroda called on Japan Inc. to deploy its cash and invest more on facilities and workers, saying “the rule book for business will be rewritten” as the economy emerges from deflation.

“This is a great chance,” Kuroda said in a speech at the Tokyo headquarters of the Keidanren, Japan’s biggest business lobby. “Firms that are able to get ahead of a change in the environment promptly and to adapt to the economy in an expanding equilibrium will become the winners of the competition and enjoy prosperity in the new era.”

The remarks underscore Kuroda’s bid to get companies to buy into efforts by the central bank and Abe administration to shake Japan out of two decades of stagnation. While profits are soaring with a weaker yen, companies are hoarding record cash, cutting capital expenditure, and failing to boost wages quick enough to keep up with rising living costs.

“Kuroda is working very hard to convince companies to help revive the economy,” said Maiko Noguchi, an economist at Daiwa Securities Co. and a former BOJ official. “Kuroda offered an optimistic outlook on the economy - that was more like his determination to make that happen than an outlook.”