Need To Know News

BOJ Governor Masaaki Shirakawa said raw material price spikes are braking Japanese economic growth. He said the world’s second-largest economy will cool for now but then grow at a moderate pace later. He claimed Japan is more resistant to downside risks than in the past.

BOJ Governer Masaaki Shirakawa expressed concern over Japanese economic growth, saying he expects downside risks to increase while price pressures have risen since April. Speaking after the BOJ’s decision to hold its headline interest rate at 0.5%, he also noted:

*The economic situation in Japan differs from the envirnoments in the US and Europe

*Nations should choose monetary policy based on their economies

*Global inflation risks are intensifying

*Currencies should reflect economic fundementals

*Downside risks for the US econom are still high

*Monetary policy should not be focused on impact to forex markets

*Global markets remain unstable

The BoJ’s Shirakawa says downside risks threaten the slowing Japanese economy which has left the BoJ with a “difficult balancing act.” Shirakawa warns of rising inflation expectations and says the BoJ has no set view in regards to policy decisions. Shirakawa expects growth to pick up by the end of the year.