Financial Times (June 4)
“With inflation stuck at zero, and the BoJ’s attempts to fly looking more like Wendy’s than Peter Pan’s, Mr Kuroda has taken every opportunity to reinforce his commitment to future inflation…. In Neverland, whatever Peter Pan wanted, he got. In his determination to end Japan’s deflation, Mr Kuroda may be the same.”
The Economist (February 21)
“Deflation can be a good thing. But today’s version is pernicious.” Prices have fallen in Germany, Italy, Spain, Greece, indeed the euro zone as a whole, and “ultra-low inflation is also widespread. America, Britain and China each have inflation rates of less than 1%.” Should there be another crash, central banks would have little room to act. “The world is grievously underestimating the danger of deflation.”
Tags: Central banks, China, Deflation, Euro zone, Germany, Greece, Italy, Pernicious, Prices, Spain, U.S., UK
Financial Times (January 23)
“It has taken far too long for the European Central Bank to embark on quantitative easing but its belated action is no less welcome.” ECB president Mario Draghi unveiled a massive program to purchase eurozone bonds through 2016 to help counter the threat of deflation. “There is no doubt that Mr Draghi needed to act. Growth and underlying inflation have been relentlessly weak, providing clear evidence that demand in the eurozone is faltering.”
Tags: Bonds, Deflation, ECB, eurozone, Growth, Inflation, Mario Draghi, Quantitative easing
Financial Times (December 19)
Concerns that lower oil prices will spark deflation are misplaced. “While lower oil prices will have a one-off arithmetic effect on the price level and hence reduce inflation, that should boost growth rather than retarding it. Lower oil prices…benefit households almost immediately,” essentially raising real incomes and stimulating demand.
Tags: Concerns, Deflation, Demand, Growth, Households, Inflation, Oil prices, Real incomes
Bloomberg (August 10)
The Bank of Japan has refrained from additional monetary stimulus; an apparent acknowledgement that “pumping more money into the economy won’t end Japan’s deflation. Falling prices are as much about the aging population as anything else, and only structural change can arrest the trend.” Fortunately, the economy might just be driven by “a new breed of Japanese companies going overseas as the domestic market shrinks.”
Tags: Aging population, BOJ, Deflation, Economy, Japan, Market, Monetary stimulus, Overseas, Prices, Structural change
The Economist (August 9)
Abenomics may be working at the top, but it’s not trickling down to “folk who do not own bundles of shares or a flat in Tokyo’s trendy Daikanyama neighbourhood…. The mantra of Mr Abe and his advisers has been that a virtuous circle would come about whereby wages would rise and lift consumer spending, which in turn would boost investment by companies. Bingo: Japan would emerge from deflation. That is not happening and it is a conundrum.”
Tags: Abe, Abenomics, Advisers, Consumer spending, Daikanyama, Deflation, Investment, Japan, Shares, Tokyo, Trickle down, Wages
New York Times (February 18, 2014)
“Some analysts and public officials say the beleaguered euro zone is finally on the road to recovery…. But theirs is an overly optimistic view.” Europe risks falling into deflation “if government officials and central bankers do not take steps to bolster the economy.” Coordinated efforts would be ideal, but with European governments unlikely to work together “it is up to the central bank to act when it meets again next month.”
Tags: Analysts, Central bank, Deflation, Economy, Euro zone, Europe, European governments, Optimistic, Recovery
Financial Times (February 6, 2014)
“In an era when much of the world is worried about the possibility of drifting into Japanese-style deflation, one country has precisely the opposite problem: unbridled inflation.” Over the last 5 years, India’s consumer prices have been rising annually by close to 10%. “That is no small matter for the multitudinous poor, for whom escalating food prices can summon the spectre of hunger. Nor does it do much for macroeconomic stability, which India badly needs in this year of tapering and tricky political transition.” Fortunately, new central bank governor Raghuram Rajan looks “up to the task.” With his tough policies, he may prove the Paul Volcker of India.
Tags: Central bank, CPI, Deflation, Food, Governor, Hunger, India, Inflation, Japan, Macroeconomics, Paul Volker, Poor, Raghuram Rajan, Stability
Institutional Investor (June issue)
“Optimism is beginning to infect Japan’s corporate leaders–a crucial factor considering that the new policies must spur corporate investment and expansion if they are to succeed in fostering a sustainable economic turnaround.” Corporate leaders have welcomed Abenomics, but the jury is still out. “Corporate Japan will consider the new government successful if it can end the psychology of deflation and stagnation and offer the prospect of renewed growth. So far, business leaders are fairly optimistic.”
Tags: Corporate leaders, Deflation, Expansion, Government, Investment, Japan, Optimism, Psychology, Stagnation
Financial Times (April 18, 2013)
“The revival of Japan will be beneficial to the rest of the world, since it is also a process of evolution into a mature economy that can build win-win relationships with its economic partners,” writes Finance Minister Taro Aso. He continues, “the Bank of Japan has fired a monetary bazooka at deflation,” aiming to achieve 2% inflation. A “second bazooka” will seek to create private demand with flexible fiscal policy and the aim of boosting real GDP by 2%. Already, there is a dramatic improvement of economic and market sentiment. This “momentum must now be turned into a recovery.”
Tags: BOJ, Deflation, Economy, Finance Minister, Inflation, Japan, Market sentiment, Recovery, Taro Aso
