5 December 2022 | Other

BOJ’s Wakatabe warns that the risk of “Japanification” hasn’t yet disappeared

Despite a rapid rise in inflation, Bank of Japan (BOJ) Deputy Governor Masazumi Wakatabe warned central banks about a continuing risk of so-called “Japanification”, or economic stagnation. 

Wakatabe is an active advocate of aggressive monetary policy easing. According to him, “Japanification” still endangers the global economy. A neutral interest rate, at which the monetary policy neither stimulates nor limits economic growth, might be affected by various factors. 

Japan’s economy has been in deflation for a long time. As Wakatabe stated, this experience has shown that it’s extremely difficult to get rid of the fear of economic stagnation.

In 2013, Japan’s central bank launched a massive program of purchasing assets in order to support the country's economy and beat deflation that lasted for nearly two decades. However, these measures didn’t help to bring inflation to the target level of 2%. As a consequence, the Bank of Japan switched to a negative interest rate policy in 2016.

In the current economic situation, the bank continues to adhere to this strategy, even though inflation has already exceeded the target level due to rising commodity prices. The bank's policy is mostly driven by its experience of economic stagnation.

Company MarketCheese
Brent sell
Period: 11.07.2025 Expectation: 400 pips
Brent falls ahead of OPEC+ decisions
04 July 2025 37
Period: 18.07.2025 Expectation: 900 pips
AUDCAD is likely to keep pulling back from its monthly high
04 July 2025 34
Period: 10.07.2025 Expectation: 1200 pips
Selling USDJPY during rebound with 142.430 target
03 July 2025 57
Period: 11.07.2025 Expectation: 220 pips
Heatwaves across Europe and US support gas price recovery from recent lows
03 July 2025 160
Period: 08.07.2025 Expectation: 1500 pips
EURUSD rally faces potential correction toward 1.165
02 July 2025 83
Period: 09.07.2025 Expectation: 1400 pips
USDCAD declines amid US dollar weakness and improving Canadian trade prospects
02 July 2025 57
Go to forecasts