World Bank backs Japan inflation targeting

James Wolfensohn, president of the World Bank, said on Thursday that it was sensible for Japan to use monetary policy to reverse deflation, amid debate among Japanese policymakers about the introduction of an inflation target. Outgoing BoJ governor Masaru Hayami has called inflation targeting a "reckless gamble".

Mr Wolfensohn said the country's innovative potential was being wasted because of its dysfunctional financial system.

"Clearly deflation (in Japan) is problematic, and trying to revita

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