Bank of Japan (BoJ) governor Toshihiko Fukui cautiously forecast the nation's deflationary pressure will end as early as in March next year following recent signs of firm recovery.

Asked when deflation would end, Fukui said in a television interview: "Theoretically, we can expect that at the end of this fiscal year (in March 2005) or the next fiscal year."

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He quickly added: "But at this stage, it is too early to say the forecast is certain. Tough time always comes after you see the goal."

Fukui said Japanese firms still needed more efforts to reduce excessive workforce and cut debts, while it takes more time for Japanese financial institutions to clean up their bad loans.

In the latest sign of recovery, the Japanese government said Friday the unemployment rate for the year to March fell to 5.1 percent from the record high of 5.4 percent hit the previous year.

The rate was the lowest since the year to March 2001, when it was 4.7 percent, the government said, adding that for March alone, the jobless rate fell to 4.7 percent, a three-year low, from 5.0 percent in February.

Another encouraging sign was consumer price data showing deflation was easing, economists said.

The Tokyo core consumer price index (CPI), a leading indicator of nationwide price trends, in April fell 0.1 percent from a year earlier, smaller than expected although still marking the 55th straight decline.

On a month-on-month basis, the core rate, which excludes volatile fresh food prices, rose 0.2 percent after a 0.4 percent rise in March.

Fukui said uncertainties in Iraq and signs of increase in long-term interest rates were among factors to put cold water over the Japanese economy.

"People have remained concerned about geopolitical risks, led by Iraq situations, which can also risk the economy," Fukui said.

"Economies are improving globally, and long-term interest rates have begun rising," Fukui said.

"I am concerned that if they rise faster than the real economy expands, that would have a negative impact on the economy," he said.

Fukui also said the central bank would closely watch how the Chinese government handled its overheating economy.

Financial markets around the world were hit last week by concerns China would seek to rein in its runaway economy by raising interest rates. Investors are also worried about an expected rate rise in the United States.





^Toshihiko Fukui

http://www.channelnewsasia.com/stories/afp...w/82867/1/.html

I can see you're very busy here, Ogumo? MM too slow for ya ?

Haha. Is it that obvious? I really have began to neglect that site.

I tend not to give much weight to these economic predictions. Economists tell these placebos to the public to make them feel better. Nothing is more difficult to predict than a national economy. Perhaps save for a girl when she's pms-ing.

That is a good point. Of course they would never come out and say the economy has no future.

Of course not, they're paid by the government to tell people that everything is ok. Look at Greenspan, hes probably the most useless federal official. Every now and then all he does is just play around with interest rates to entice the American public to spend again. I surmise this is exactly what Fukui is doing.

We will see in a few months.