Japanese Finance Minister Taro Aso said a weaker yen is only a “byproduct,” rather than the goal, of the government’s efforts to stimulate the economy.
“The yen has become cheaper as a result, but only as a byproduct,” Aso said today in a speech at the Center for Strategic and International Studies in Washington. “To say that cheap yen is our goal would grossly miss the point,” Aso said, adding that the government of Prime Minister Shinzo Abe has “redrawn the economic landscape.”
Aso spoke after a meeting of the Group of 20 finance ministers and central bankers gave Japan leeway to reflate its stagnant economy by indicating its newest monetary easing isn’t an explicit effort to bring down the yen’s value.
While defending Japan’s efforts to revive growth and eliminate deflation, Aso said officials in some emerging nations are concerned Japan’s low yields may prompt excessive flows of capital into their economies.
“There is fear among emerging nations of massive capital inflows” as easing reduces bond yields in Japan, he said.
As they warned of a weak global recovery, Group of 20 finance ministers and central bankers said today in Washington the Bank of Japan’s new measures aimed at delivering 2 percent inflation within two years are “intended to stop deflation and support domestic demand.” They echoed their promise of February that nations will refrain from “competitive devaluation.”
Aso likened the deflation that has afflicted the world’s No. 3 economy for 15 years to a gradual death.
“Deflation is like a slow-motion death by losing temperature,” he said.
“In its early stage, it does not feel so painful,” Aso said. “It is already too late when you have finally become aware that you are a hostage and that you cannot escape the vicious cycle.”
To contact the reporter for this story: Toru Fujioka at Tfujioka1@bloomberg.net
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