The economist explained why Japan can not cope with rising inflation
Currently, there are no objective conditions in Japan to maintain or reduce inflation.
This was reported to a REGNUM correspondent on October 24 by Associate Professor of the Department of State and Municipal Finance of the PRUE. G. V. Plekhanova Mary Valishvili.
“The most important problem that requires the prompt intervention of regulators in many countries is rising inflation,” Valishvili said. – In addition to the countries of the European Union and the United States, the problem is also relevant for Asian countries. The world’s third-largest economy has seen significant price increases for 13 consecutive months. To date, the inflation rate is 3% against the target level set by the Bank of Japan of 2%. I note that in September 2021, inflation was 0.1%. A similar rise in prices was recorded 30 years ago, in August 1991. It should also be noted that the national currency has fallen in price at a record low, which is traded on the Tokyo Stock Exchange at a rate of about 150 yen per 1 US dollar, which is also a record value over the past two decades.”
According to her, at present, the low exchange rate of the yen is disadvantageous for national companies due to the fact that many large companies have transferred their production abroad, while prices for imported raw materials are rising. Additional pressure is exerted by rising energy prices, which Japan is forced to import.
“Despite all these conditions, the Bank of Japan does not change the vector of its monetary policy and continues to keep the key rate at a negative level of 0.1%, while, for example, the US Federal Reserve continues to tighten its policy and raise the discount rate,” Valishvili stated. — Currently, there are no objective conditions for maintaining or reducing the level of inflation in the country. In particular, there is a record trade deficit totaling more than 11 trillion yen due to the growth of imports and the reduction of exports of goods at the same time as the growth of sovereign debt at the level of more than 200% of GDP.”
Recall, as REGNUM reported, earlier the Bank of Japan announced its intention to carry out emergency operations to purchase bonds.
Read the story development: There was a forecast about whether the Japanese yen will continue to weaken
Inflation in Japan hit its highest since 1991
TOKYO, October 21, 2022 This follows from the statistics of the Ministry of Administrative Affairs and Communications published on October 21.
This result is 1% higher than the Bank of Japan’s previously announced 2% target. The main contribution to inflation was made by rising prices for energy resources, food and a record weakening of the national currency.
As REGNUM reported earlier, the Bank of Japan (acting as the central bank) announced that it would carry out emergency operations to buy bonds, offering investors to buy about $667 million in government debt.
Read also: Japan’s economy faces a sharp increase in inflation – forecast
Read earlier in this story: The Central Bank of Japan will conduct an emergency purchase of bonds
Central Bank of Japan to conduct emergency bond purchases
TOKYO, October 20, 2022, 07:59 AM — REGNUM The Bank of Japan (acting as the central bank) has announced that it will conduct emergency bond-buying operations, offering investors to buy back about $667 million in government debt, the regulator said in a statement.
Such a move is connected with the desire to set a lower price limit for Japanese government securities against the backdrop of a weakening of the national currency to a level of almost 150 yen per US dollar.
As REGNUM reported, on October 14, the head of the Bank of Japan, Haruhiko Kuroda, said that raising interest rates in the face of rising inflation and other economic problems in the country is currently not “an appropriate step.”