Consumer prices in Japan have fallen for the fifth month out of the last six, highlighting the challenge the Bank of Japan (BOJ) will have in meeting its 2% inflation goal announced earlier this week.
The BOJ announced it would emulate the US and Europe by making open-ended bond purchases beginning in January 2014.
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Consumer prices excluding fresh food fell .2% year-over-year in December. As a result, the BOJ may feel increased pressure to add more stimulus if it is to reach the 2% inflation goal set by
The yen weakened after the report. Meanwhile, George Soros declared the worst of the euro’s troubles are over, that the euro will survive and will strengthen even as other currencies vie to devalue their currencies.
Soros believes austerity is the wrong policy to help Europe and that Germany’s insistence on tight fiscal and monetary policies will keep the euro expanding as other countries expand, leading to a currency war.
Soros said the only way countries could emerge from debt is to grow their economies. He says the US economy has good underpinnings and that interest rates should pick up once the fiscal and deficit issues are resolved.
He also says there is a real estate bubble in China
based on lending by China’s quasi-banking system. He said the extent to which Japan can devalue its currency will be limited by how what the US is willing to tolerate.