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Business
Kan Pledges to Slay the Dragon of Deflation
Monday, August 2, 2010
Dragon and Knight
Tokyo -- In Diet debate today, Prime Minister Naoto Kan pledged to defeat the deflation that has dogged the Japanese economy for many years.
"We will attempt to boost economic growth by creating more jobs and then overcome deflation," Kan declared.
"We must emerge from this deflationary period which has gone on for years," he added.
Kan was responding to questions from ruling party lawmaker Jin Matsubara, who strongly advocates the setting of an inflation target of 2 to 3%.
Notably, the prime minister also leaned on the Bank of Japan to ease its monetary policies.
Many observers - including such opposition leaders as Yoshimi Watanabe of Your Party - blame the Bank of Japan for creating deflation in the economy through their overly tight monetary policies.
About 150 DPJ Diet members are said advocate similar policies and call themselves "anti-deflation lawmakers."
Meanwhile, allies of the Bank of Japan have been resisting the concept of creating inflation targets to boost the economy, saying that the idea is unwise and unworkable.
Deflation refers to a reduction in the price of goods and services. This, in turn, tends to lead to lower production, which can bring about a host of other negative economic effects.
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