More On The Japanese Recovery

The FT has a fairly balanced editorial this morning on Japanese monetary policy and on the potential pitfalls of an over-rapid tightening policy:

"There is no need to hurry normalisation. Japan's real economy is in increasingly good health. But the exit from deflation remains recent and tentative. The BoJ's focus on its definition of core inflation - which does not exclude energy prices - exaggerates the extent to which rising prices are entrenched in the Japanese economy. Core inflation excluding energy was just 0.1 per cent in December, and was negative throughout the rest of 2005. Land prices are still falling nationally, although at a declining rate."

This sounds like a voice of reason and prudence in an Ocean of rash speculation (Not Claus, naturally, but the atmosphere he is describing).