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Nation on ‘right path’ to beat deflation, Shirakawa says

by Jun Hongo

Staff Writer

Departing Bank of Japan Gov. Masaaki Shirakawa said Thursday that the country is on the “right path” to ending its decades-long deflation.

The bank upgraded its assessment of the domestic economy at its Policy Board meeting, likely the last for Shirakawa, who is stepping down March 19, saying it has “stopped weakening.”

Shirakawa is set to be replaced by Asian Development Bank President Haruhiko Kuroda, whose nomination by Prime Minister Shinzo Abe is being deliberated at the Diet.

Kuroda, who is expected to win the support of the majority of members in both Diet chambers, will likely usher in more aggressive monetary easing policies.

When asked to comment on his successor, Shirakawa said it “is inappropriate for me to comment since the deliberation is still ongoing.” He also offered no response to Kuroda’s criticism that the BOJ has failed to properly fight deflation over the past few years.

Nor did Shirakawa reflect on his five years at the top of the BOJ, saying he will do so at his final news conference on March 19.

In concluding the two-day Policy Board meeting that began Wednesday, the BOJ held off further monetary easing and its members unanimously agreed to maintain the virtually zero interest rate policy.