Title: Japan's Lowflation Problem
Headings: Japan's Lowflation Problem
May 30, 2021,05:30pm EDT
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Japan's Lowflation Problem

Content: And how will the Japanese government pay off all that debt? But their joy – and their concern - was premature. Since April, inflation has tailed off again, along with any possibility of monetary policy “normalization,” as central bank watchers like to call it. Though since Japan’s interest rates have effectively been zero since 1995, we have to wonder what “normalization” would even mean. Surely, after this length of time, zero interest rates are "normal"? This, in a nutshell, is Japan’s problem. After such an extended period, expectations of zero inflation and zero interest rates are firmly baked in. Anyone under 40 has never really known anything else. Shifting these expectations is a Herculean task. No wonder inflation has proved ephemeral.