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Reply #87: BoJ calls the end of deflation (From Tuesday) [View All]

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54anickel Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Oct-19-05 01:22 PM
Response to Reply #7
87. BoJ calls the end of deflation (From Tuesday)
http://news.yahoo.com/s/ft/20051018/bs_ft/fto101820051653333599;_ylt=Ag8m2qw4VOlKasuww8wAmpj2ULEF;_ylu=X3oDMTBiMW04NW9mBHNlYwMlJVRPUCUl

Japan's deflation will be conquered by the end of this year, parliament was told on Tuesday.

Kazumasa Iwata, deputy governor of the Bank of Japan, said the central bank believed monthly year-on-year changes in consumer prices would be zero or rise slightly by the year-end for the first time in seven years.

In the bank's twice-yearly address to politicians, he said: "As a trend, year-on-year rises in the CPI (consumer price index) will move higher."

The development will mark one of the most significant turning points in the country's recent economic history.

snip>

The onset of inflationary expectations should trigger a revival in consumer spending as Japanese start buying before prices go up. This would have important macroeconomic consequences, as about 55 per cent of Japan's gross domestic product is attributable to consumer spending.

Any sustained increase in prices in Japan could also lead to a transfer of Japanese household assets, from non-risk assets such as bank accounts and into risk assets such as investment trusts.

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