--Kawade says Japan does not face deflationary-spiral --
--Japan's Kawade says to mull downward revision of exports' view --
By Yumi Ikeda, BridgeNews
Tokyo--Jan. 26--U.S. Federal Reserve Chairman Alan Greenspan's remarks Thursday prompted the strengthening of the yen, Eiji Kawade, vice minister for economic and fiscal policy at the Cabinet Office, said Friday. Kawade added that Japan is not facing a deflationary spiral, although prices have been falling.
* * * Greenspan said Thursday there has been a "dramatic slowing down" in the U.S. economy and, "We are probably very close to zero" now in terms of economic growth. (see story 17929)
Kawade, speaking at a regular press conference, said that he will closely monitor the October-December gross domestic products (GDP) in the U.S. and the next Federal Open Market Committee on Jan. 30-31.
) are undesirable." As of 1610 JT, the U.S. dollar/yen was at 116.92.
Meanwhile, due to the slowing U.S. economy, Kawade and his staff may consider a downward revision of their view on exports in the monthly economic report for February released by the Cabinet office.
Regarding prolonged declines in consumer prices, Kawade said that, "Although prices have been falling indeed, Japan does not face deflationary-spiral." He added that, "it is not time for the Cabinet Office to change its assessment on consumer prices from the current view that consumer prices have been weakening slightly."
In addition, Kawade said he will closely watch what fund provision measures will be proposed by the Bank of Japan staff at its next policy board meeting on Feb. 9.
BOJ governor Masaru Hayami, as chairman of the BOJ policy board, ordered Jan. 19 central bank staff to consider further liquidity provision measures to financial markets.
According to the statement by BOJ, domestic financial and capital markets have shown greater volatility against the background of recent financial developments overseas, as the end of the fiscal year draws closer.
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