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(CEP News) - In a speech given in Tokyo late Thursday evening, Bank of Japan Governor Masaaki Shirakawa said the central bank would have to balance the risks of a slowing economy with the threat of rising inflation.
"We don't have any pre-set direction for policy and must carefully examine both upside and downside risks," Shirakawa said. "If asked about a numerical-weight allocation, I would say that it is fifty-fifty growth to inflation." While the threat of second-round inflation effects was being monitored by central banks around the world, Shirakawa acknowledged that such effects had not yet been noted in Japan. However, the Japanese central banker did concede that inflation expectations could rise. "When the economy and prices moves in opposite directions, we need some kind of standard to judge monetary policy," Shirakawa said. "For this, the Bank of Japan and many other central banks focus on whether inflationary expectations are maintained as stable." By Todd Wailoo,
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