Menu

Search

  |   Insights & Views

Menu

  |   Insights & Views

Search

Abe’s long term perspective of control on deflation

Japanese Prime Minister Abe's aim is to revitalize private sector corporate activity and ensure an exit from deflation through three policy roots.

  • The first root is bold monetary policy that aims to direct yen depreciation, enhance inflationary expectations, and improve business sentiment as well as create a stronger expectation for economic growth through a stock market rally.

  • The second root is flexible fiscal policy that targets to narrow the deflationary gap by causing additional demand, thus creating an environment in which money supply from the BoJ's monetary policy can circulate smoothly.

  • The third root is growth strategy that aims to restore the confidence of companies and encourage them to take action on the new investment opportunities provided by structural reforms. Numerous bills that aim to further the growth strategies have been submitted during the current session of diet, suggesting that the focus on the third arrow is picking up pace.
In our view, corporate de-leveraging and low risk-taking have been the main the causes of the prolonged weak domestic demand and deflationary environment.

  • Market Data
Close

Welcome to EconoTimes

Sign up for daily updates for the most important
stories unfolding in the global economy.