Japan Government Wants To Declare End To Deflation

The government of Japan is now considering putting an end to deflation as prices continue to go up. The government believes that by stopping deflation, there would be a big chance for Japan’s economy which has been stuck in a rut for quite a long time affecting workers and investors. 

According to Kyodo news report, there is ongoing speculation that the Bank of Japan will soon leave its light policy measures. At this stage, there’s no official declaration from the government yet. 

The government will decide after the annual labor-management wage talks on March 13 as they have to assess if it will turn out strong enough to offset price hikes and consider the outlook on price trends.

Over the past few years, Japan government has kept its stance that the country was no longer in deflation but it has refrained from declaring an outright win over falling prices. 

By making a formal announcement, it would mark the end of nearly two decades of price declines and economic stagnation that followed the end of its “bubble era” boom.

Meanwhile, the Nikkei 225 index surged and set a new all-time high after it went up by 0.5% closing at 40,109 on Monday, March 4. This incredible milestone has lifted most Asian stock markets, particularly the technology stocks. Technology stocks led the advance, with gains from Advantest (3.7%), Tokyo Electron (2.4%), Disco Corp (2.9%), Renesas Electronics (4.9%), and Socionext (3.2%).

This momentum stemmed from strong corporate profits, the enthusiasm for Artificial intelligence (AI), and anticipation of interest rate cuts by major central banks this year. 

Furthermore, the Bank of Japan stated last week that it’s too early to assume a sustained achievement of the central bank’s 2% target, suggesting a prolonged run of ultra-easy monetary settings.