Bank of Japan Deputy Gov. Kiyohiko Nishimura indicated Thursday he is not concerned that the recession will trigger a return of sustained price declines.

'It's crucial to look at companies' and households' inflationary expectations over the medium to long term to determine whether the economy slips into a deflationary spiral,' Nishimura said in a speech in Utsunomiya, Tochigi Prefecture. Those expectations 'are stable now,' he said.

A collapse in demand for Japanese products at home and abroad has raised concern that the country will experience a repeat of the deflation that plagued it for a decade until 2005. The International Monetary Fund said Wednesday that Japan's economy will shrink this year at the fastest pace in the postwar era.

Japan Times