Outgoing BoJ chief admits failure on state’s deflation

TOKYO - Agence France-Presse

Outgoing BoJ’s Governor Masaaki Shirakawa answers questions during his last press conference at the headquarters in Tokyo in this file photo. AFP photo

The Bank of Japan’s (BoJ) outgoing governor acknowledged he failed to end the country’s long-running deflation, during his last news conference as head of the central bank.

Masaaki Shirakawa, 63, leaves the job about three weeks before the official end of his term after sparring with Prime Minister Shinzo Abe over policies aimed at stoking the world’s third-largest economy.

Abe pressured BoJ policymakers for aggressive easing and other measures to stoke growth, while the central bank has also faced criticism from incoming Governor Haruhiko Kuroda, who himself has pledged to reverse years of falling prices that crimped private spending and corporate investment.
Shirakawa’s tenure faced one crisis after another, including the 2008 collapse of Lehman Brothers that sent the world economy into a tailspin, and the eurozone debt crisis that helped push up the value of the safe-haven yen, hurting Japan’s exporters.

‘I believe in Japan’s economy revival’

“The Japanese economy experienced serious downturns due to a number of significant events, including the Lehman shock, the European debt crisis and the quake-tsunami,” he told a parliamentary committee. “Despite our utmost efforts, unfortunately we have yet to bring the economy back to a path of sustained recovery with stable prices,” he added.

Shirakawa said that a “proactive” government approach to economic growth would help turn around Japan’s fortunes, and pointed to a cautious recovery in the US and China. “I believe the Japanese economy will be revived again,” he said.

Shirakawa’s appointment in 2008 was sparked by a crisis that saw a deeply divided parliament unable to agree on a BoJ governor, leaving the post vacant for weeks with the job ultimately given to the soft-spoken deputy governor.

Despite criticism that he was too cautious on battling deflation, Shirakawa was credited with keeping Japan’s financial system relatively stable through 2008 and 2009 when the international banking system came to a near collapse.

Japan’s parliament approved Haruhiko Kuroda as theBank of Japan’s next governor on March 15. The BoJ’s new management team was expected to take up their posts on today.