Shared delusion…
Obama
By Paul Panckhurst
April 22 (Bloomberg) — Japan’s absence of “concrete reform plans” for the nation’s finances may be contributing to deflation and sluggish economic growth by discouraging spending by the public, central bank Governor Masaaki Shirakawa said.
Consumers may be limiting spending “on concerns over future fiscal developments,” Shirakawa said in remarks prepared for an event in Washington yesterday. This may be “one factor behind sluggish economic growth and mild deflation,” he said.
The Bank of Japan is under pressure from lawmakers to step up its attack on more than decade-long deflation as the government seeks to sustain a recovery from last year’s earthquake and economic contraction. Shirakawa has pledged to extend “powerful” easing until a 1 percent price goal is in sight and his policy board next meets on April 27.
The nation’s borrowings will exceed 1,000 trillion yen ($12.4 trillion) for the first time in this fiscal year, the Finance Ministry projects, while the Organization for Economic Cooperation and Development predicts Japan’s public debt will reach 219 percent of gross domestic product.
Shirakawa said yesterday that stability in Japanese government bond yields shows investors’ expectations that “fiscal soundness will be restored through structural reforms in both the economic and fiscal areas.”
“At the moment, such expectations are not firmly backed by concrete reform plans,” he said.