Deflation over at last, economy minister says

The economy is no longer in deflation, and the Bank of Japan ought to end its quantitative easing policy if conditions are met, the economy and banking minister said Sunday, further fueling speculation of a pending policy change.

"We are no longer in deflation, in the classical sense of the word," Kaoru Yosano said on an NHK TV program.

"If conditions are met, I think it is all right for the BOJ to make the decision (to end the policy)," Yosano added.

Deflation has been in effect for about seven years, with prices declining and undermining economic growth by eroding company earnings and paychecks.

To help spur a recovery, the central bank has maintained an easy monetary policy of flooding the markets with excess cash and maintaining interest rates at zero for the last five years.

The bank has said it will end its quantitative easing policy once year-on-year changes in the core consumer price index stabilize at zero or above, its board members agree that the CPI won't fall back, and the economy is strong enough to warrant a move.

The core CPI was up 0.1 percent on-year in November and December, and is expected to rise again in January, while the economy grew at a healthy 5.5 percent annual rate in the fourth quarter.

Some government ministers have urged the bank to be cautious so as not to choke off the recovery.