Search Keywords
Financial Times Wall Street Journal Economist
News Period From   To
News: 60885    Funds: $437    Pays: $524

Go Back to
News List
|
|
This News on
Daily Paywall
  Rated 76 | Views 292
Rate it | Share it 

Japan News
BOJ Plays Down Slide in Oil Prices
From the Wall Street Journal of Fri, 19 Dec 2014 05:17:08 EST
 A pedestrian walks past the entrance to the Bank of Japan.
A pedestrian walks past the entrance to the Bank of Japan. Associated Press

TOKYO—The Bank of Japan stood pat on monetary policy Friday despite a rapid fall in global oil prices that threatens the central bank’s efforts to generate 2% inflation.

Oil prices have fallen more than 25% since late October, when the BOJ expanded its monetary easing program, citing the decline in oil prices as a threat to its quest to defeat more than a decade of deflation.

This time, though, BOJ Gov. Haruhiko Kuroda played down concerns over oil prices, and expressed more optimism about Japan’s economy, which some took as a sign that he isn’t considering taking additional steps anytime soon.

“The conversion of the deflationary mindset of the Japanese people is making steady progress,” Mr. Kuroda said at a news conference, after the BOJ’s nine-member policy board voted 8-1 to keep its policy on hold.

The BOJ expanded its monetary easing on Oct. 31, saying it wanted to protect Japan’s fragile inflation expectations. Because the BOJ backed its commitment to the 2% target with action, inflation expectations of households and business executives have remained at “elevated levels” since, making further easing unnecessary for now, Mr. Kuroda said.

Considering the extent of the decline in oil prices, it “may be difficult” for Japan’s inflation rate to pick up until early summer, he said. But “from a slightly long-term perspective,” lower energy costs will actually put upward pressure on prices by stimulating economic growth, keeping Japan’s inflation rate on course toward the 2% target “in or around” the year through March 2016, he said.

Nevertheless, many private economists say they expect the BOJ to open its monetary spigot further next year. Junichi Makino, chief economist at SMBC Nikko Securities, predicts that the BOJ will act at its Jan. 20-21 meeting at the earliest.

Japan’s inflation rate, as gauged by the core consumer price index, slipped in October to 0.9%, adjusted for a national sales tax increase in April. Gasoline and other energy items account for about 8% of the core index.

A drop in oil prices has been a welcome relief for consumers, particularly in big oil importing nations like Japan. But it has been a source of headaches for central banks struggling to stoke inflation, including the European Central Bank. If cheaper energy prices strengthen general expectations that growth in consumer prices will weaken, that could become a self-fulfilling prophesy.

While emphasizing his optimistic price outlook, Mr. Kuroda acknowledged that unless Japanese companies raise wages, putting more real money into consumers’ pockets, the BOJ could fall short of its target.

“For us to achieve 2% inflation and make it sustainable, continued wage growth is absolutely essential,” he said.

Write to Takashi Nakamichi at takashi.nakamichi@wsj.com and Tatsuo Ito at tatsuo.ito@wsj.com



This article is provided by DailyPaywall.com, which is published and distributed by Paolo Cirio Ltd., registered in England, number 8188080. Registered Office: Suite 36, 88-90 Hatton Garden, City of London, EC1 N8PG, United Kingdom. Paolo Cirio Ltd. alone is responsible and liable for information and services provided through Daily Paywall’s newspaper and website.







Earn Money
Offer Money
Buy Advertising
Buy Artwork Article

Similar Articles