- Bank of Japan Deputy Governor Hiroshi Nakaso
Haruhiko Kuroda's path in beating deflation is moving to its end. At least his Deputy, Hiroshi Nakaso thinks so, saying the world's third largest economy was eyeing an end to decade-long period of deflation, as a pickup in wages and higher inflation expectations allow companies to start raising prices of their goods and services, meaning there is a strong confidence over a sustained economic growth. However, there should not be any room for complacency, as exports– one of the key growth components, still post sluggish growth, thus, it will be premature to debate an exit strategy for the central bank's unprecedented stimulus programme. It will be worth mentioning that Nakaso is the only BoJ member who was involved in the central bank's exit from the previous five-year stimulus programme back in 2006.
According to the Deputy, the central bank will not be able to use the same approach for scaling back the QE as it did 8 years ago. However, he pointed out that the BoJ already has various tools to withdraw liquidity. While some analysts believe inflation can cool in the coming months, Nakaso warned markets against focusing too much on a monthly CPI report. What is more important, is the mechanism for pushing prices higher was falling in place, citing narrowing output gap and higher inflation expectations.
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