Inflation a worry for most economies, but not Japan

Surging prices are haunting consumers and confounding economic planners in the U.S. and other countries, but not in Japan, where sparking inflation has proven an elusive goal.

While the Federal Reserve and most other central banks are shifting into inflation-fighting mode, the Bank of Japan on Friday chose to reduce its corporate bond purchases but will continue pumping tens of billions of dollars into the economy in hopes of eventually attaining its elusive 2% inflation target and getting the economy to grow faster.

With outbreaks of the omicron variant of coronavirus looming in many parts of the world, “high uncertainties" persist, it said.

The chances of hitting that target anytime soon remain “slim," Marcel Thieliant of Capital Economics said in a report. “The upshot is that the Bank of Japan will remain among the few central banks that won't tighten policy for the foreseeable future."

Inflation was 0.1% in October. Excluding volatile food and energy prices, it was negative. The BOJ is forecasting 0% inflation for the fiscal year that ends in March.

By contrast, U.S. consumer prices grew 6.2% in October over the previous 12 months, the most in three decades.

During the pandemic, the Federal Reserve and other central banks unleashed a barrage of monetary stimulus similar to Japan’s, taking interest rates to record lows in some cases. Now that the U.S. and other economies are on the mend and prices are surging, the Federal Reserve and other central banks are moving to wind that down without snuffing out economic recoveries.

With U.S. inflation nearing a 40-year high, Fed policymakers on Wednesday announced plans to shrink the central bank's monthly bond purchases twice as fast as earlier planned. That puts it on a path to begin raising interest rates within the...