What is the potential for reflation in Japan?

JAPAN

Nathan Gibbs, fund manager Schroder Investment Management (Japan), writes the country has probably the best opportunity in a decade to encourage a build-up of inflationary expectations.

Although much of the recent focus on Japan has been on the Bank of Japan’s monetary policy, the debate has also widened to include a broader mix of policy options from the government aimed at addressing long-term growth trends. Over the past few months, Mr Shirakawa, the outgoing Governor of the Bank of Japan, has reiterated that an end to deflation hinges not just on monetary policy, but also on concerted action from both the central bank and politicians. In this respect, Mr Shirakawa has pursued a difficult path between maintaining the independence of the central bank and acceding t...