Suda Bank of Japan has little chance of deflation Winning FY 2011

Bank of Japan, Miyako Suda, a board member said the country probably will not overcome deflation in the year from April, a view that conflicts with the Central Bank forecasts moderate inflation in the year .
"The chances of overcoming the fundamental negative prices for consumers in the next fiscal year are not high," Suda said in a speech in Yamagata, northern Japan today, referring to the 12 months from April. "It will take time to overcome deflation."
Suda, senior member of the board whose terms expire in March, failed to offer proposals to beat more than a decade of price declines. The central bank in October cut its interest rates near zero and has created a fund of 5 trillion yen (U.S. $ 60 billion) to buy government and corporate debt and riskier instruments, including traded funds traded.
"Given that Suda is a relatively aggressive member of the board, the fact that she said that prices will keep falling suggests the Bank of Japan could delay end its global facilitation program," said Naoki Iizuka, senior economist at Mizuho Securities Co. in Tokyo. "There is no way the conditions for increasing prices are set in fiscal year 2011."
Suda is a member of the board first to suggest deflation may persist beyond the next year forecasts of the policy board of the Bank of Japan in October that core consumer prices rise 0.1 percent in fiscal year 2011. Prices by that measure, which excludes fresh food, fell 0.6 percent in October, the fall line 20.
The price index adjustment to the month of August also reduces the chances of overcoming the low prices, Suda said. The statistics office reorganization of the basket of goods used to measure the CPI, a measure that Goldman Sachs Group Inc. estimates may decrease the rate of inflation by 0.4 percentage points.
Risks Remain
Suda said the risks to the economy can remain as an advance against the dollar yen clouds the outlook for growth. Reports in the last week showed exports grew at the slowest pace this year and factory production fell for the fifth month, the evidence points to the weakening economic expansion in the last quarter of 2010.
"Given the strong yen and declining business confidence and consumer, there is a high risk that the temporary weakening of the economy will remain," said Suda.
Bank of Japan, Masaaki Shirakawa, said this week that the expansion of the program bank purchases of assets is a "likely option" if the bank has to ease monetary policy.
Suda later told reporters the central bank is aware that you may need to diversify the assets acquired in the bottom of 5000000 million yen to avoid exerting too much influence on specific markets.
Foreign currency assets
Asked if those purchases might include foreign currency assets, Suda said the chances were "extremely low but not zero." Purchase said could be interpreted as a form of currency intervention.
The bank, in October pledged to maintain "practically zero" interest rates to a point of view arises from sustained price increase. Board members say they consider inflation stable in a positive range of up to 2 percent, with the median estimate of 1 percent.
"The Bank of Japan will remain under pressure to make it even more given the economic outlook is unclear," said Masamichi Adachi, senior economist at JPMorgan Chase & Co. in Tokyo. "The Japanese economy is in a soft patch with a risk of delayed recovery because the impact of a stronger yen will weigh on growth over this quarter."