Authorites in Japan are nothing, if not conservative. Many blamed the entire Japanse economic crisis of the last ten years or so on arch conservative policies that kept the rate of interest far too high, when what was needed was a boost to the economy. And then when deflation started to bite, the Bank of Japan dropped rates to zero percent, it was too late; more was required, but when it comes to the rate of interest, you can’t do more than nothing.
Then, earlier this decade, there were signs of a recovery, but at a point when the dusty lamp which was the Japanse economy was still lingering at the bottom of a pile of junk, authorities reacted as if the inflation genie was already out and up went rates. A big mistake. Dotcoms went bust, and the land of the morning sun, returned to a status of permanent economic nightime.
Of late there have been signs of a recovery. But it’s been reliant on China. As the dragon on its doorstep slowly eases itself out of a millenium long slumber, Japan has been warming itself on the beast’s breath.
But the consumer stayed in doors.
Now at last, even that is beginning to change. In December the Japanese Consumer price index, excluding fresh food, was up 0.1%. Wow!, you might sarcastically proclaim, but then bear in mind that prices were also up 0.1% in November, and that’s the first back to back period of positive Japanese inflation since 1998. Maybe at last, the Japanse consumer economy is recovering.
But the vein of conservatism runs deep. And the not so conservative Japanese politicians are fearing that the arch conservative central bank will up rates again, and far too soon.
Comments
Trackbacks