Abe’s Japan Stimulus Plans in Jeopardy, Weinberg Says: Tom Keene

Japanese Prime Minister Shinzo Abe’s plans for expanded monetary stimulus may be blocked by opposition-party resistance to his central-bank nominee, according to Carl Weinberg, founder of High Frequency Economics.

“The new government in Japan, and the new Bank of Japan governor, clearly want to do what’s called extreme quantitative easing, just really pump the money in there,” Valhalla, New York-based Weinberg said in an interview on Bloomberg Radio’s “Surveillance” with Tom Keene. “It’s not clear they’re going to be able to get the job done.”

Japan’s currency traded almost the weakest since August 2009 after the lower house of parliament endorsed Haruhiko Kuroda as the next central-bank governor. Abe’s nominee awaits an upper-house vote tomorrow.

The yen dropped 0.2 percent against the greenback to 96.27 per U.S. dollar after falling to 96.71 on March 12, the lowest since August 2009. The dollar fell 0.1 percent to $1.2971 per euro, after touching the strongest level since December.

The consumer price index in Europe may turn negative by year-end, Weinberg said, as Europe struggles to avoid deflation.

“What we’re seeing right now is a very pernicious cycle, wages and prices are grinding to a halt,” Weinberg said. “We’re looking at a real deflation risk, which is especially scary.”

Euro-area inflation fell below the European Central Bank’s 2 percent ceiling for the first time in more than two years, the European Union’s statistics office in Luxembourg said March 1. Annual inflation slowed to 1.8 percent in February from 2 percent a month earlier.