Haruhiko Kuroda: Overcoming deflation - Japan's experience and challenges ahead

Speech by Mr Haruhiko Kuroda, Governor of the Bank of Japan, at the 2019 Michel Camdessus Central Banking Lecture, International Monetary Fund, Washington DC, 22 July 2019.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Introduction

It is my great pleasure to have the opportunity today to give a speech in honor of Michel Camdessus.

In my speech today, I would like to share some thoughts on Japan's deflation that started from the late 1990s, when Mr. Camdessus served as the Managing Director of the International Monetary Fund (IMF). The inflation rate in Japan started to decline after the burst of the asset bubble in the early 1990s. The economy fell into deflation in the late 1990s, in the sense of a sustained decline in prices, and this deflation persisted for about 15 years.

Such chronic deflation used to be regarded as a phenomenon unique to Japan. However, most advanced economies have been experiencing low inflation and low interest rates since the global financial crisis. Many central banks now face a common challenge of how to raise inflation rates. I believe that Japan's experience of a long battle against deflation would provide a case study for other central banks in conducting monetary policy going forward.