In Japan, keeping interest rates near zero has likewise failed
to yield the desired results, raising doubts about the
credibility of the quantitative and qualitative monetary easing
policies announced by BOJ Gov. Haruhiko Kuroda in April, 2013.
Data on Friday showed Japan's core inflation rate for 2015,
excluding volatile food prices, at 0.5 percent.
That and other figures show the economy remained anemic last
year, as stagnant incomes, the slowdown in China and the mixed
blessing of lower oil prices hobbled Prime Minister Shinzo Abe's
recovery strategy.
Consumer spending fell 4.4 percent in December from a year
earlier, as households chose to save rather than splurge on any
gains from the low oil prices that are slowing inflation. It was
the fourth straight month of year-on-year declines.
Industrial output fell 1.6 percent in December from a year
earlier, partly due to slower demand for machinery and
electronics components and devices in China.
"Today's activity data were disappointing and suggest that
Japan's economy barely grew last quarter," Marcel Thieliant of
Capital Economics said in a commentary.
Abe took office three years ago vowing to get growth back on
track through massive injections of cash by the government and
central bank, and by sweeping reforms to boost competitiveness.
The central bank said Friday it would also persist with its
"quantitative easing" purchases of about 80 trillion yen (about
$660 billion) of government bonds a year.
The aim is to end a long spell of deflation, or falling prices,
that is thought to be discouraging corporate investment. But
while corporate profits have soared as massive stimulus weakened
the Japanese currency, making earnings made abroad worth more
when converted into yen, investment and wages have lagged.
Average incomes fell 2.9 percent from a year earlier in
December. Even though unemployment was steady at 3.3 percent and
the job market remained tight, companies wary over the economic
outlook are opting not to raise pay.
Some economists contend that the "Abenomics" focus on inflation
as a spur to growth is misplaced. Pushing the banks to lend will
only work if companies borrow and invest.
"Corporate Japan has accumulated substantial cash on balance
sheets, while the Japan labor market is getting tighter," Ajay
Kapur of Merrill Lynch said in a recent report.
"The key is to recirculate Japan's corporate cash to Japan's
household-labor sector via wage increases. Otherwise,
'Abenomics' is likely to fail in generating self-sustaining
growth," he said.