New Bank of Japan governor vows to end economic doldrums
Sat Mar 23, 2013 5:59PM
Japan's new Central Bank Governor has promised to fulfill the government's plan of achieving a two-percent inflation target to lift the country out of the economic doldrums within two years. But his words are not persuasive to many, including the outgoing governor. Still, the fulfillment of these goal may mean the end of a two-decade period of economic stagnation for Japan.The new Governor of the Bank of Japan, Haruhiko Kuroda, took up his post this week. He promised to make an all-out effort to fight deflation with aggressive measures and to achieve results soon. He gave his first press conference. Prime Minister Shinzo Abe has raised public expectations about the economy by promoting inflation through easing measures. In other words, increasing the amount of money in circulation. These expectations have been mirrored in higher stock prices, and an approval rating of over 70% for Abe. However, the previous Bank of Japan Governor, Masaaki Shirakawa, disagreed with Prime Minister Abe over ways to kick-start the world's third-largest economy back into life, and resigned. In addition, many observers doubt whether Kuroda will be able to lift Japan out of its economic stagnation. Some are worried that prices will outstrip wages, and reduce the purchasing power of ordinary people, which will keep the economy stagnant. In addition, aggressive easing measures will help Japan's exports, but will hit the average consumer hard in the wallet. Even the Deputy Prime Minister, Taro Aso, has criticized the 2-year target to achieve a 2% inflation rate as "academic" and "unrealistic". Kuroda's words will have to be backed by results before the rest of the world can be convinced that Japan is on the path to recovery. However, experts say there will be no visible signs of improvement before this summer's Upper House Elections.