Word: shirakawa
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After weeks of calls by the Japanese government to do something about deflation and the fast appreciating yen, the Bank of Japan held an emergency meeting Tuesday - and decided what the world's second largest economy needs is more money. Central bank governor Masaaki Shirakawa announced steps to step up monetary easing by injecting 10 trillion yen (about $115 billion) into Japan's financial system. Shirakawa told reporters that these steps could be considered "quantitative easing in a broad sense." The eight-member policy board also unanimously voted to maintain the Bank of Japan's key short-term interest rate...
...Shirakawa has previously said that it was not the lack of liquidity in Japan's economy, but the lack of demand that is behind the economic situation. On Nov. 20, the day that Hatoyama acknowledged deflation, Shirakawa said, "We need to work on the core reason for [deflation]: weak final demand as seen in capital investment and private consumption." Economists estimate Japan's demand shortage at around $400 billion a year. (Read: "Japan's Latest Economic Ailment: Deflation...
...while industrial output in the world's second-largest economy jumped 5.9% in May - the third consecutive month-to-month increase - output remains down nearly 30% compared with May, 2008. "Currently, the recovery is boosted by global destocking and the government economic-stimulus measures," says Hiromichi Shirakawa, chief economist at Credit Suisse in Tokyo. "If [those] fade away, it's possible for the [economy] to go down again." (See 10 things to do in Tokyo...
...risk could be reduced if U.S. consumer demand for Japanese products began to strengthen, or if the government introduced additional stimulus spending. Due to budget constraints, says Shirakawa, the latter is unlikely. Japan currently spends 4% of GDP, an unusually high ratio for a developed country, to service its burgeoning debt. But a pickup in consumption is possible, he says. The savings rate in the U.S. has increased in the past few months, and consumers may be feeling more confident that they can now spend a little more. That could provide some relief to Japan's battered export sector; Japanese...
...politicians - smelling blood in anticipation of general elections, which must be held by September but could come before then - might choose to take advantage of Aso's weakness by blocking passage of additional stimulus measures, no matter how pressing the need, says Credit Suisse chief economist Hiromichi Shirakawa. DPJ politicians "can now argue that the government has already lost their ability to get back on a path to recovery," Shirakawa says. "I think the messy situation could get messier...