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New BoJ chief pledges 'all-out efforts' on deflation

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(Globalpost/GlobalPost)

The Bank of Japan's new governor Haruhiko Kuroda on Thursday pledged "all-out efforts" to rid Japan of growth-sapping deflation as gloomy new trade data underlined the scale of the task ahead.

Kuroda, a finance veteran who backs aggressive easing measures to drag the world's third-largest economy out of its malaise, told Prime Minister Shinzo Abe he would do his best to help right the world's third-largest economy.

"To Prime Minster Abe, I said that I will make all-out efforts, together with the two deputy governors, to pull Japan's economy out of deflation," Kuroda said after meeting the premier in the morning.

The 68-year-old former Asian Development Bank president, who took office Wednesday, was to hold his first official press briefing later Thursday as markets look for signs of policy moves before a regular BoJ meeting in April.

"The key is whether he will talk about scheduling an interim board meeting in the coming days," Hideyuki Ishiguro, senior strategist at investment strategy at Okasan Securities, told Dow Jones Newswires.

Kuroda is a longtime BoJ critic who said the central bank has been too timid in its approach to stoking economic growth.

But he has hailed a two-percent inflation target aimed at tackling deflation -- seen as more explicit than a previous "goal" -- adopted by the bank in January.

On Tuesday, outgoing governor Masaaki Shirakawa acknowledged he had failed to reverse the falling prices that have crimped private spending and corporate investment since the 1990s.

But he warned that easing measures alone would not restore Japan's former glory, pointing to further the need for deregulation and a reduction in Tokyo's massive public debt.

Shirakawa, 63, left the job three weeks before the official end of his term after sparring with Abe over monetary policy. At one stage, the premier threatened to rein in the BoJ's independence if it didn't fall in line with his policy prescriptions, sparking criticism from central bankers overseas.

Earlier Thursday, the finance ministry said Japan logged an $8.1 billion trade deficit in February as exports to key markets China and Europe sagged, while imports jumped nearly 12 percent as Tokyo's energy bills soared.

"The data highlight the need for more aggressive easing in Japan from a revamped BoJ," said Chris Tedder, research analyst at Forex.com in Sydney.

Japan's increasing reliance on pricey fossil fuel imports in the aftermath of the nuclear disaster at Fukushima in 2011 has reversed Japan's usual trade surplus.

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http://www.globalpost.com/dispatch/news/afp/130321/new-boj-chief-pledges-all-out-efforts-deflation