Japan Lending Surge Meets Deflation Bottleneck: Chart of the Day
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The most lending by Japanese banks since May 2009, fueled by record liquidity, has yet to reverse more than a decade of deflation, underscoring the challenge facing the next Bank of Japan governor.
“Just expanding the injection of money won’t help,” said Masamichi Adachi, senior economist at JP Morgan Securities Asia in Tokyo and a former BOJ official. The next governor needs to show how he’ll improve the transmission mechanism by which extra monetary easing translates into rising prices, he said.