Reply #4: BOJ On Guard Against Accelerating Price Declines

[ozymandius]

TOKYO -(Dow Jones)- The Bank of Japan's governor expressed concern Tuesday over a quickening fall in consumer prices, but said Japan's economy wasn't in danger of entering a deflationary spiral.

Considering how sharp Japan's economic downturn has been, "it may take time for falls in prices to end," Masaaki Shirakawa told a press conference after the bank's two-day policy board meeting.

But he said the BOJ doesn't expect Japan to fall into a deflationary spiral, suggesting that measures the bank has taken would help curb any deterioration of demand and supply conditions.

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Earlier in the day, the BOJ policy board voted unanimously to leave the unsecured overnight call loan rate target at 0.10%.

The board's post-meeting statement also expressed caution about the recent fall in consumer prices, noting that the rate of decline in Japan's core consumer price index has accelerated.

http://online.wsj.com/article/BT-CO-20090811-704588.html