GPIF President Says Japan Unlikely to Reach Inflation Target

As nation's monetary easing seems unlikely to bring 2 percent inflation, world's largest pension fund may need to increase investments overseas.

The Bank of Japan’s unprecedented monetary easing will fail in its goal of spurring 2 percent inflation, according to Takahiro Mitani, president of the fund that manages the world’s largest pool of pension savings.

While Japan is making progress toward ending deflation, consumer-price gains will probably stay between 0.1 percent and 1 percent, said Mitani, the head of the 124 trillion yen ($1.21 trillion) Government Pension Investment Fund (GPIF). The fund may revise asset allocations in as little as a year after a government-appointed panel recommended a review of domestic bond holdings, he said.

GPIF and other public pension funds should consider investing more in overseas assets, private equity, commodities, infrastructure, and real-estate investment trusts, the panel said. GPIF needs more independence from the Ministry of Health, Labor and Welfare, which currently oversees its investments, according to the report.

Japanese Economy Minister Akira Amari said on Nov. 20 he will work toward realizing the group’s proposals, while adding Nov. 22 that any changes in the management of GPIF will depend on whether Japan has deflation or inflation.

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