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Outgoing BoJ chief Shirakawa says failed on deflation

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(Globalpost/GlobalPost)

The Bank of Japan's outgoing governor on Tuesday acknowledged he failed to end the country's long-running deflation, but pointed to better times ahead as he steps down from the post.

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.

The country was also hammered by the earthquake-tsunami and subsequent nuclear crises in 2011, damaging Japan's manufacturers.

"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 on Tuesday.

"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.

Shirakawa, whose two deputies are also stepping down Tuesday, was to give a press briefing at 3:30 pm local time (0630 GMT). The BoJ's new management team was expected to take up their posts on Wednesday.

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http://www.globalpost.com/dispatch/news/afp/130319/outgoing-boj-chief-shirakawa-says-failed-deflation