By Stanley White
TOKYO (Reuters) – Finance Minister Taro Aso said on Tuesday that Japan has essentially escaped from the economic malaise linked to asset price deflation, although policymakers need to do more.
“We have a 2 percent consumer price target, and achieving this would prove that we have really escaped deflation. I expect the government and the Bank of Japan to work together to achieve this price target,” Aso told reporters after a cabinet meeting.
Japanese stocks have reached their highest in more 20 years and land prices have starting rising after around a decade of declines, reflecting the recovery in asset prices.
Aso was responding to questions about the government’s decision to reappoint BOJ Governor Haruhiko Kuroda for a second five-year term.
The nomination is certain to be approved in parliament, meaning Kuroda’s aggressive quantitative easing program will remain in place.
Japan’s economy has grown for eight straight quarters, the longest continuous expansion since a 12-quarter stretch of growth between April-June 1986 and January-March 1989 around the height of Japan’s notorious economic bubble.
However, consumer price inflation remains below the BOJ’s 2 percent growth target, partly because companies remain very cautious about raising retail prices for fear of discouraging cautious shoppers.