For all the talk about clear communications at the Federal Reserve, central bank Vice Chair Janet Yellen’s speech to the Society of American Business and Economics Writers ran a rather long-winded 16 pages.
However, while Fed board members generally do not take questions from reporters, there was a scheduled audience Q&A which, at this particular event, meant it was effectively a press briefing.
So I asked Yellen, seen as a potential successor to Fed Chair Ben Bernanke when his second term ends early next year, what she thought of Japan’s decision to launch a bold $1.4 trillion stimulus to fight a long-standing problem of deflation and economic stagnation.
This is what she said:
I prefer not to comment on the details of what the Bank of Japan announced. But I’d certainly say that here’s a country that’s suffered deflation for well over a decade and had very weak economic growth.
When you contemplate the fact that nominal income, nominal GDP in Japan today is slightly lower than it was I think 20 years ago – I mean that’s really remarkable and has resulted in all kinds of problems for Japan. So I really think that taking an aggressive approach to try to end deflation is something I certainly understand.