Japan fin min Kato: Japan still not in a state where we can call end to deflation

• Japan’s economy is a state of experiencing a supply shortage rather than a lack of demand
• Don’t have a plan to modify the joint government and BOJ statement on ending deflation
• Japan transitioning to an economy where price raises are driven by import costs to one driven by wage gains
• Judging from underlying inflation and comprehensive price gauges, Japan is still not in a state where we can permaently call the end to deflation

This comes after signs of higher wages in union negotiations.

In the bigger picture, I suspect Japan fighting to end deflation will be like an evil genie who grants you a wish only to twist it. Japan is sitting on a debt bomb and deflation is the only thing that’s kept it from igniting.

This article was written by Adam Button at www.forexlive.com.