The stealth un-captured and unreported deflation - Japan economy grows at a very past pace of 4.8% but why is Bank of Japan so eager to hold interest rate down?
Peter Oberois
Feb. 15, 2007

The Japanese economy grew at the very fast pace of 4.8%. The fastest pace in almost three years as consumer spending rebounded and business investment jumped. But Bank of Japan (BOJ) indicated no change in rates any soon.

The Yen is rising with a hope of rate hike but those close to BOJ indicated that the central bank is not very interested in raising the rates very soon.

BOJ knows the internal of the Japanese economy very well. The stealth deflation persists in spite of occasional big jump in growth rates. Next week as a matter of fact BOJ may even raise rates. Econometric probability models predict 51% chance of rate hike.

But no matter what the deflation that started officially in Japan is actually spread all over the world. The deflation is spreading fast, and the data from Japan is temporary. The trend of higher growth in Japan will continue for some time but eventually the deflation will be back. History says deflation, once started, stays for decades, unless debt is very low.

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The stealth un-captured and unreported deflation - Japan economy grows at a very past pace of 4.8% but why is Bank of Japan so eager to hold interest rate down?
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The Japanese economy grew at the very fast pace of 4.8%. The fastest pace in almost three years as consumer spending rebounded and business investment jumped. But Bank of Japan (BOJ) indicated no change in rates any soon.
READ MORE>>

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