Japan's Inflation Target Remains Elusive

Japan's struggle with deflation has been going on for nearly 30 years.

In December 2012, stimulus measures known as "Abenomics" were announced (named after Japan Prime Minister Shinzo Abe).

But, despite this aggressive, three-pronged approach of monetary easing, fiscal stimulus and structural reforms, Japan is still finding it difficult to escape the clutches of a deflationary psychology.

EWI's Financial Forecast addrressed this in August 2016:

With its economy stalling, again, late last month Japan promised further stimulus measures. Much to the dismay of stimulus addicts, however, Japan stopped short of a helicopter-money drop. "If history is any guide," says Bloomberg, "this stimulus will just pile up more debt without really boosting long-term growth." That's exactly the point that Conquer the Crash, The Elliott Wave Theorist and the Elliott Wave Financial Forecast have been making.

So, EWI's analysts are not surprised that Japan's inflation target of 2% remains elusive.

Read this short Jan. 23 article from NHK World:

The Bank of Japan has decided to maintain its massive easing measures at current levels, in a bid to meet the target of 2-percent inflation.

The central bank said on Tuesday after wrapping up a 2-day meeting that it would continue to focus on managing short- and long-term interest rates.

It said it would stick with a short-term interest rate of minus 0.1 percent on portions of deposits from commercial banks.

The target yield for the benchmark 10-year Japanese government bond will be kept at about 0 percent. To do this, the bank will continue to buy government bonds at an annual pace of about 80 trillion yen, or about 720 billion dollars.

In 2013, the central bank and the government issued a joint statement, setting a goal of a 2-percent year-on-year rise in overall prices in a quest to end deflation.

But recent data shows that inflation has not yet reached even one percent.

Still, the Bank of Japan maintained its expectation of hitting 2-percent inflation around fiscal 2019, as it left its inflation forecasts unchanged for the next few years.

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