Bank of Japan chief vows to tackle economic woes

TOKYO, Nov. 30 (Xinhua) -- Bank of Japan (BOJ) Governor Masaaki Shirakawa said on Monday that his institution would do its best to prevent the nation from sliding into deflation and losing the momentum needed to maintain the current tentative economic recovery, and would watch changes in international currency markets carefully.

Speaking in Nagoya, Shirakawa said that what is "key is first, to keep improving the supply and demand balance of the economy as a whole, and second, to prevent a vicious circle between economic activity and prices, especially to maintain the stability of the financial system. Based on such thinking, the Bank will do its utmost to overcome deflation both in terms of monetary easing and ensuring the stability of the financial markets."

Shirakawa also said the BOJ was paying attention to the strength of the yen. He noted that "the effects of the recent rapid appreciation of the yen on business sentiment of the firms that are on the road to recovery," would have to be tackled. Last week, the value of the dollar fell to less than 85 yen, its weakest level since the mid 1990s.

To tackle problems, Shirakawa said it is "critical to make households feel secure about their future and firms able to have expectations about the future growth." To this end, he said the bank would look to increase stability in financial markets in order to generate conditions that would allow the economy as a whole to grow.

Shirakawa said that he believe that tackling the current economic circumstances would take "human will," and thanked Nagoya, an area where a lot of auto makers have manufacturing plants, for its efforts to develop such products as hybrid cars.

The BOJ governor argues that the government and his institution are on the same page, and will work together to tackle an economic situation that sees prices in decline and households spending and earning less amid a rising yen that is likely to lead to a decline in business sentiment.