Japan inflation worries unfounded, says IMF
(MADRID) Japan’s underlying inflation excluding food and energy is still very low and there is no reason to worry about the country’s inflation outlook, the International Monetary Fund’s (IMF) Asia director said last Saturday.
Japanese annual inflation jumped to a decade- high of 1.2 per cent in March on soaring energy costs, triggering one of the biggest ever sell-offs in Japanese government bonds.
The IMF’s David Burton, however, told Reuters that any rising price pressures would be offset by a slowdown in the US and global economy.
‘If you exclude food and energy from Japanese core inflation, it’s still very low, around zero. I don’t think yet there is reason to be unduly worried about inflation really picking up in Japan,’ Mr Burton said on the sidelines of the Asian Development Bank’s (ADB) annual meeting, held this year in Spain.
‘In Japan right now, given uncertainties about the global economy, there are probably downside risks on growth as there are everywhere. Any concerns about inflation picking up will be counterbalanced by downside risks to growth emanating from the global economy.’
Japan’s economy is contending with mounting downside risks as it faces the prospect of sharply weakening growth from a US slowdown and soaring raw materials costs.
For the first time in two years, the Bank of Japan dropped from a half-yearly report on the economy its mantra of gradually ‘adjusting’ Japan’s low rates towards more normal levels. — Reuters
Source : Business Times - 05 May 2008
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