A day before the Bank of Japan’s final policy decision of 2015, data show the nation’s companies are hoarding more cash than ever even as Governor Haruhiko Kuroda has repeatedly said wage growth is needed for sustainable inflation.
Cash and deposits held by companies rose 6.1 percent from a year earlier to a record 247 trillion yen ($2 trillion) at the end of September, the BOJ’s quarterly flow of funds report showed Thursday. Households held 53 percent of their 1,684 trillion yen assets in cash, little changed from 55 percent in December 2012 when Prime Minister Shinzo Abe took office.
While Abe and Kuroda have succeeded in helping boost Japanese companies’ stock prices through a weaker yen, Thursday’s data supports the view that they haven’t won trust from companies and households that they will be able to end deflation. One-half of 42 economists surveyed forecast that the BOJ will have to bolster stimulus by April as Kuroda’s inflation target remains out of reach, according to a Bloomberg survey conducted earlier this month.
“These figures reflect inflation expectations aren’t rising much,” said Hiroshi Shiraishi, an economist at BNP Paribas SA. “Companies still can’t see it’s wise to increase investment based on what Abe or Kuroda say.”