Finance Blog number 1

Donald N. Frey, the engineer who spearheaded the design and development of the Mustang, the spunky, stylish, affordably priced "pony car" that Ford Motor Co. rolled out in the mid-1960s in one of the most successful car introductions in automotive history, died March 5 in Evanston, Ill., where he lived. He was 86.
 
The cause was a stroke, his son Christopher said.
 
Though much of the Mustang was borrowed from other Ford vehicles, including a Falcon chassis, the car developed an identity all its own for a younger generation in search of new looks and experiences. It was designed to appeal to both men and women, had a dash of elegance copied from European sports cars, and featured a galloping steed in the middle of its grille that buyers thought was, well, really cool.
 
Steve McQueen was almost upstaged by the souped-up Mustang he drove in the movie "Bullitt."
 
Frey and his team created the car — from approval by top management to the showroom _ in just 18 months, and expectations were modest when it was introduced on April 17, 1964, at the New York World’s Fair. Ford figured it would sell 80,000 Mustangs in its first year. It sold more than a million in its first two years.
 
Frey (pronounced fry) would go on to other achievements. He was chairman and chief executive of Bell & Howell Co., recipient of the National Medal of Technology and a member of the executive board of the World Bank. He was proudest, he said, of helping to introduce safety improvements like disc brakes and radial tires to Ford cars.
 
But to automotive cognoscenti and just plain car lovers, the Mustang was his defining accomplishment. At gatherings of Mustang enthusiasts, Frey was often besieged by autograph hunters in the manner of a rock star.
 
As Ford’s assistant general manager and chief engineer, Frey worked closely on the Mustang project with Lee A. Iacocca, then general manager of the Ford division. Frey is credited with coming up with the initial Mustang prototype, a mid-engine two-seater roadster unveiled in 1962. He later led all design and engineering work. (Other designers, led by Joe Oros, later added back seats and other features.)
 
Frey pursued the project even though Henry Ford II, the president of the company, had turned it down four times, partly because Ford’s new Edsel had just failed so spectacularly. Lacking an official go-ahead, Frey met with Iacocca and other engineers and designers in a motel at night and in a storage room by day.
 
"The whole project was bootlegged," Frey told USA Today in 2004. "There was no official approval of this thing. We had to do it on a shoestring."
 
When Ford finally approved the project, he looked directly at Frey and told him in several unprintable words that he would be fired if the Mustang was not successful, according to Frey, who recounted the episode in 2004 in an interview with Northwestern, the alumni magazine of Northwestern University, where Frey taught engineering for 20 years, until 2008 no fax pay day loans.
 
When Ford promoted Frey to vice president of North American vehicle product development in 1967, Time magazine called him "Detroit’s sharpest idea man."
 
In his book "Mustang: An American Classic" (2009), Mike Mueller quotes Frey as saying the inspiration for the Mustang came from watching Chevrolet’s successful strategy for improving sales of the compact car Corvair. "I guess in desperation they put bucket seats in the thing, called it the Monza, and it started to sell," Frey said.
 
But he told Northwestern that the spark had come from his children. "Dad, your cars stink," he remembered them saying at the dinner table. "There’s no pizzazz."
 
In addition to his son Christopher, Frey is survived by his fourth wife, Kay Everly, from whom he was separated; another son, Donald Jr.; three daughters, Margaret Walton, Catherine McNair and Elizabeth Sullivan; a brother, Stuart, who was also a top executive at Ford; nine grandchildren; and six great-grandchildren.
 
Donald Nelson Frey was born on March 13, 1923, in St. Louis and grew up in Waterloo, Iowa, where his father was chief metallurgist for a John Deere plant. He attended Michigan State University for two years, then left to serve in the Army in World War II. After his discharge, he earned bachelor’s, master’s and doctoral degrees in metallurgy from the University of Michigan.
 
He stayed to teach at Michigan but later left to manage Ford’s metallurgy department in its laboratory, hoping to acquire real-world engineering experience, as he told The New York Times in 1965.
 
Frey left Ford in 1968 to become president of General Cable Corp. In the 1970s and ’80s he was chairman of Bell & Howell. He divested it of less profitable operations like mail-handling equipment and nurtured its profitable videotape division.
 
Meanwhile, the Mustang gained weight and horsepower before being downsized just in time for the 1970s spike in gas prices. In 1979 it got bigger again and then went through yet more redesigns. Its popularity oscillated, too, but the original boom was never equaled.
 
At his death Frey owned an original Mustang, his son Christopher said, adding that he liked to drive it fast.
 

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In the wake of recessionary conditions, television company Belo Corp. is reporting a promising trend on the advertising side of the business.

Dallas-based Belo (NYSE: BLC) presented at the Barclays Capital High Yield Bond and Syndicated Loan Conference on Thursday.

During the presentation, Belo President and Chief Executive Officer Dunia Shive said first-quarter spot advertising revenue is better than expected and is “pacing up in the mid-teens no fax cash loans.”

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LPK (Libby Perszyk Kathman) said Monday that it has opened a second Asian office, this one in Singapore.

The office will led by Geffrey Chan, director of brand design, according to a news release. The company also has an office in Guangzhou, China, which it opened in 2006.

LPK said the office will serve international clients like Procter & Gamble, Kraft Foods and Cadbury, while looking for new business from companies in the region.

“Having an on-the-ground presence in Singapore allows us to provide a centralized hub of operations for emerging Asia Pacific markers beyond mainland China, which remains the primary responsibility of our Guangzhou office,” said John Recker, president of LPK International, in the release payday loans.

Cincinnati-based LPK is a design and branding agency with operations worldwide. The company has more than 350 employees and also has offices in London; Geneva; and Frankfurt, Germany.

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In the next couple of weeks, lawmakers are expected to unveil an unprecedented climate change proposal that may open up more areas for offshore drilling and cut emissions through a cap on greenhouse gases and a tax on gasoline.

Details on the proposal, put forth by Sens. John Kerry, D-Mass., Joe Lieberman, I-Conn., and Lindsey Graham, R-S.C., are scant - the actual bill isn’t expected until at least the end of the month.

But since this may be the last time this year climate change law is discussed, timing is critical. And with health care, financial reform and looming elections on Washington’s collective plate, it faces an uphill battle.

Still, there’s an outside chance the novel idea could gain traction.

"If they put out something people really like, they’ve got a real shot," said Christine Tezak, an energy and environmental policy analyst at asset management firm Robert W. Baird & Co.

Cutting emissions

The oil, utility and manufacturing industries will all be affected by the new law — the challenge is to craft something they’ll all feel comfortable with.

Tax gasoline: Many oil companies have opposed a cap-and-trade system — where the government issues annual permits to pollute and then ratchets down that number each year.

Like many economists, oil companies maintain that it is an inefficient system, with too many middle men to handle the complex trading of permits.

Their opposition to cap-and-trade intensified when they weren’t granted liberal exemptions under the greenhouse gas bill that passed the House last summer — the bill that this Senate version is meant to complement.

So to win their support the Senate proposal is thought to include a straight-up carbon tax on products derived from oil, such as gasoline, which would likely be passed along to consumers at the pump.

The tax isn’t expected to be huge — starting at something under 10 cents a gallon for gasoline and moving up to maybe 20 cents a gallon after 10 years, said Kevin Book, Managing Director of research at ClearView Energy Partners, a Washington D.C.-based research firm.

And the tax isn’t expected to discourage people from driving, said Book, as it’s too gradual and small to have much of an impact. But revenue from it would likely be spent on other, cleaner transportation projects like mass transit or subsidies for hybrid cars.

So although the oil industry may be more receptive to this gas tax idea, their ultimate support for the law is uncertain.

"We’d like to see more of the proposal," said Lou Hayden, senior director of federal relations at the American Petroleum Institute, echoing the sentiment of most interest groups involved.

In the end, at least one analyst doesn’t think the oil industry will play ball.

"It is unlikely that the oil industry will eventually support whatever shape it takes in the bill," Divya Reddy, an energy policy analyst at the political consultancy Eurasia Group, wrote in a recent research note. "Moreover, carbon fees will translate into higher prices at the pump, an outcome with which few politicians will want to be associated."

Cap emissions for utilities: Power producers may give the proposal a warmer reception, although here again their eventual support lies in the details guaranteed high risk personal loans.

The utility industry as a whole was generally supportive of a cap-and-trade plan that applied to the whole economy, even if they dickered with lawmakers over how fast emission cuts should happen.

For utilities, a cap-and-trade law allows them to upgrade their equipment and pass the cost along to consumers. And under the House cap-and-trade bill, the pass-through to consumers is offset by plans that allow reductions to come from things like planting trees and rebates for low income ratepayers. The Congressional Budget Office said the House bill would cost the average household an additional $175 a year.

As for participating in a cap-and-trade plan without other manufacturers, the industry didn’t rule it out.

"We’re keeping an open mind on everything," said Jim Owen, spokesman for the utility association’s Edison Electric Institute.

A temporary reprieve for manufacturers - Several Midwest Senators opposed a greenhouse gas bill on the grounds that it would make U.S. firms less competitive with foreign factories that don’t have to comply with tighter pollution rules, and hence cost American jobs.

To get around this, the Senate plan calls for some delay in holding factories accountable to the new rules — maybe five to 10 years.

It’s unclear whether this will be enough to get industry and their key Midwest lawmakers on board.

More energy

In return for approving all the reductions, lawmakers that focus on energy production want some bones.

Drilling - Key among them is greater access to U.S. oil and gas reserves — and the great prize in that is Alaska’s Arctic National Wildlife Refuge (ANWR).

"You want to have me sit down at the table and talk about what a strong domestic production piece is, [then] you have to be willing to talk to me about ANWR," Sen. Lisa Murkowski, R-Alaska, was quoted as saying in remarks about what it would take to get her to support a climate bill.

Lieberman said that is not an option, and most analysts say opening ANWR isn’t in the cards.

But expanding production in the eastern Gulf of Mexico is, as well as encouraging some states to open up their waters to oil and gas drilling, said Baird’s Tezak. It’s thought that Virginia, among other states, might jump at federal laws that permanently opened more offshore areas.

Nukes - More support for nuclear power may also be in order, although it’s unclear how much more the Senate plan might allocate beyond President Obama’s recent pledge of over $50 billion in loan guarantees for the industry.

Most analysts think this is probably the last chance the Senate has this year to pass a climate bill, one of Obama’s key policy goals.

With everything going on in Washington, Obama isn’t expected to give this his undivided attention.

"He is most likely to pay lip service to the bill but not put himself on the line for it the way he has done for health care," wrote Eurasia Group’s Reddy.

But few expect this issue to go away. If a bill doesn’t materialize this year, many expect this last ditch effort will form the starting point for negotiations in 2011. 

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CHICAGO — U.S. consumers are starting to look like a frugal, debt-fearing lot as they pay down billions of dollars in credit-card obligations. But an alarming trend is emerging: A small but growing number of people are skipping mortgage payments in favor of paying their credit card bills.

In an unprecedented shift, for some consumers having a credit card in good standing appears to have taken priority over having a roof over one’s head, experts said.

"This is not a carefree or nonchalant decision," said Ezra Becker, director of consulting and strategy at TransUnion, the credit-tracking firm. "But it really is a clear illustration of the impact this recession has had on consumer preferences and behavior."

While overall consumer debt rose unexpectedly in January, consumers continued to pay off their credit cards that month — a record 16th straight month of lower credit card debt — with such debt dropping about $1.7 billion to $864.4 billion, according to the Federal Reserve.

But a small slice of those consumers are paying down credit cards to the detriment of their mortgage loans. The number of consumers delinquent on their mortgages but current on their credit cards rose to 6.6 percent in the third quarter of 2009 from 4.3 percent in the first quarter of 2008, according to a TransUnion study of 27 million anonymous consumer records pulled randomly from its database. Meanwhile, the portion of those who fell behind on credit-card payments but paid their mortgage dropped to 3.6 percent from 4.1 percent.

TransUnion calls it the new "payment hierarchy" and first began noticing the shift in the fourth quarter of 2007. Experts thought the pattern would reverse itself once the worst of the recession passed, but TransUnion’s latest study confirms that the new behavior is becoming more prevalent and stretches across all income groups.

The trend is more common among consumers with the lowest credit scores. The percentage of consumers with low scores who paid credit cards rather than home loans shot up to 29 percent in the third quarter of 2009 from 19.1 percent in the fourth quarter of 2007, according to TransUnion. And in that low-credit-score group, consumers falling behind on credit cards but keeping pace with mortgage payments declined to 14.5 percent in 2009 from 18.1 percent in the first quarter of 2008.

But mortgage-payment problems are moving up the credit score ladder, according to FICO, the credit score company. A recent FICO Score Trends report found that mortgage-default risk for consumers with high scores now exceeds their credit card default risk, "reversing a long historic trend."

In 2009, 0.3 percent of consumers with FICO scores between 760 and 850 fell into arrears on real estate loans, versus 0.1 percent who did on credit cards.

In 2009, credit card accounts were 1.6 times more likely to become 90 days late than were mortgages, a steep drop from 2005 when credit card accounts were more than three times likely to fall behind 90 days, according to FICO.

Although the numbers are small, the trend is disturbing, said Mark Greene, chief executive of FICO. "We’re identifying lending-industry situations in FICO Score Trends that, to our knowledge, have never been seen before," he said in the report.

You can blame those trends on a deep economic slump that’s pulled the rug out from under long-held jobs, home values and retirement accounts. And, in the wake of a new credit card law as banks tighten the screws on who gets credit and how much they get, some consumers are getting more protective of their credit cards. Plus, with the unemployment rate at a hefty 9.7 percent, people are worried about losing their jobs and perhaps needing their plastic to get by.

On top of that, home values have taken a beating, and many homeowners now find themselves underwater on their home loans, meaning the mortgage outweighs the current value of the real estate. For some, holding on to the undervalued house suddenly doesn’t look like the smartest thing to do now.

"The combination of all these things makes some consumers think that paying money on the mortgage might not be in their best interest relative to the credit card," said TransUnion’s Becker. "If I’m unemployed, I need to rely on the credit cards to get me through it till I get a job."

Another thing to consider, Becker said, is that customers get kicked off credit cards far more quickly than they get kicked out of their homes. It could take a year or longer to get thrown out on the streets; a bank can pull a credit card in default in 90 days, or even less if payments are habitually late.

The mortgage mess isn’t done yet, even as the economy hobbles its way into a recovery. Rachel Bell, FICO’s senior director of analytics, said she expected to see more consumers with high scores go into the home-foreclosure process, particularly on their second homes, as interest rates rise on adjustable-rate mortgages.

"If they have second homes, they’re more willing to walk away," she said. "But even on first mortgages, there are these strategic default decisions we’re seeing where consumers are willing to walk away from a home. If they’re under water financially, they don’t see the benefit of holding on to it."

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Although the foreclosure rate nationwide slipped 2 percent in February from the previous month, Florida continues to be dogged by an increasing number of foreclosures, according to the latest numbers from RealtyTrac.

In fact, foreclosure activity in the Sunshine State rose by nearly 15 percent in February, over the previous month, and was up more than 16 percent from the prior-year period, according to the Irvine, Calif.-based online real estate company.

Florida also continued to post the nation’s second-highest total number of foreclosures, with 54,032 properties receiving a foreclosure filing in February.

Although still up, the number of foreclosures in Broward County appears to have eased a bit in February, when there were 7,872, or one in every 102, homes in foreclosure. That was up just 2.54 percent from January, when there were 7,677 homes facing default.

Year-over-year, filings were up 48 percent in Broward. In February 2009, there were 5,318 homes in foreclosure.

The picture was even more bleak in Palm Beach County, where there were 4,490, or one in every 143, homes in foreclosure totally free credit score. That was up 62.5 percent from a month earlier, when there were 2,762 foreclosures filed, and up 68.4 percent from February 2009, when there were 2,665 foreclosure filings.

In Miami-Dade County, there were 6,671 foreclosures, or one in every 147 homes, up 44 percent from a month earlier, when there were 3,393 filings, and up 86.6 percent from a year earlier, when there were 3,575 filings.

Nationwide, California continued to lead the way in foreclosure activity, with 68,562 properties receiving a foreclosure filing in February, down nearly 5 percent form the previous month and down 15 percent from a year ago.

Despite a 21 percent drop in foreclosure activity from the previous month, Arizona ranked second highest among states. Florida ranked third for foreclosure activity.

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The unemployment rate in the U.S. held at 9.7 percent in February and employers cut fewer jobs than anticipated, indicating improvement in the labor market even as East Coast blizzards forced temporary closings of some businesses.

Payrolls dropped by 36,000 last month after a revised 26,000 decrease in January, a Labor Department report showed yesterday in Washington. The jobless rate, which has not increased since October, held at 9.7 percent, even as more people entered the workforce.

Stocks and the dollar rallied while Treasuries fell as investors reckoned the economy would have added jobs were it not for seasonal snowfall records in cities including Baltimore and Philadelphia. The U.S. needs employment growth to sustain a recovery from a recession that has cost 8.4 million jobs since December 2007.

“The weather effects were enough to transform what would’ve been a positive into a negative,” said David Resler, chief economist at Nomura Securities International Inc. in New York, referring to payrolls. “Job growth is happening as we speak. Companies are seeing a stabilization of demand.”

The Standard & Poor’s 500 Index rose 1.4 percent to close at 1,138.7 in New York. The dollar strengthened 1.4 percent to 90.3 yen from 89.02 the previous day. The yield on the 10-year Treasury note rose to 3.68 percent at 4:24 p.m. in New York from 3.60 percent late the prior day.

Payrolls were forecast to decrease by 68,000, according to the median estimate of 82 economists surveyed by Bloomberg News. The jobless rate was projected to increase to 9.8 percent.

Technology Services

Among companies adding workers is Accenture Plc, the world’s second-largest technology-services provider, which plans to boost payrolls by about 50,000, with as many as 9,000 jobs being added in the U.S. by the end of August.

“We are seeing a very broad uplift globally” in demand, John Campagnino, director of worldwide recruiting, said in a March 3 interview. He said the trend “brings us right back to the pre-recession” levels.

The number of temporary workers increased by 48,000 in February, the fifth straight monthly gain. Payrolls at temporary-help agencies often turn up before total employment because companies prefer to see a steady increase in demand before taking on permanent staff.

Christina Romer, President Barack Obama’s chief economist, told Bloomberg Television yesterday that it’s “very realistic” to expect employment growth in the U.S. in the next few months. Even so, “anyone that goes out and talks to people across this country knows that the labor market is still very distressed.”

Factory Payrolls

Factory payrolls increased 1,000 in February after rising 20,000 in the prior month. The median forecast by economists called for a drop of 15,000. Payrolls at builders fell 64,000 after decreasing 77,000. Financial firms reduced payrolls by 10,000 after a 13,000 decline.

The labor market may be slow to recover from the biggest slump since World War II, giving the Federal Reserve scope to keep interest rates low and putting pressure on Obama and lawmakers to foster job growth.

“A lot of people are not seeing the kind of job gains or income gains that they are looking for,” John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina, said yesterday. “There is going to be a lot of dissatisfaction with politicians and that is giving rise to this political angst.”

Many companies have been reluctant to hire even after the world’s largest economy grew at a 5.9 percent annual rate in the last three months of 2009, the most in six years.

Underemployment Rate

Economists surveyed by Bloomberg last month projected the jobless rate will average 9.8 percent in 2010 and end the year at 9.5 percent.

The underemployment rate — which includes part-time workers who’d prefer a full-time position and people who want work but have given up looking — rose to 16.8 percent from 16.5 percent. The number of part-time workers for economic reasons climbed to 8.8 million in February from 8.3 million the previous month.

Two storms blanketed parts of the country in early February, the second coming during the week that included the 12th of the month, the government’s survey week.

Yesterday’s report showed 1 million Americans said bad weather prevented them from getting to work during the survey week. About 290,000 people on average say bad weather has prevented them from getting to work, according to February figures going back three decades.

Economists at Macroeconomic Advisers LLC in St. Louis projected the weather would reduce the payroll count by anywhere from 150,000 to 220,000 workers. The drop will probably be reversed this month, they said.

January 1996

The most recent storm of similar intensity that occurred during a survey week was in January 1996. The current data for payrolls that month, which have gone through several revisions since the initial estimate, show a 19,000 drop in employment followed by a gain of 434,000 in February.

Government payrolls decreased by 18,000 in February. State and local governments reduced employment by 25,000, while the federal government added 7,000. The increase at the federal level reflected in part the hiring of 15,000 temporary workers to conduct the 2010 census.

The Census Bureau said it will hire 1.15 million temporary workers in the first half of the year to conduct the population count that takes place every 10 years. The program may have the biggest impact on payroll figures in April through June, when the bulk of the hiring will take place, and will then subtract from the job count the following months after the work is done.

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Winners in the first annual Best Bay Area Corporate Counsel Awards were named at an event Wednesday night.

About 400 people attended the awards ceremony at the Westin San Francisco Airport in Millbrae. The program was co-produced by the Silicon Valley/San Jose Business Journal and the San Francisco Business Times.

The awards honor the in-house lawyers who keep the business world running but who rarely receive public recognition. Finalists were named in 10 categories in January.

“During this process we’ve learned firsthand the numerous roles these attorneys play at their respective companies,” said James MacGregor, publisher of the Business Journal.

“We look forward to recognizing more corporate counsel in the years ahead,” added Mary Huss, publisher of the Business Times.

Nominees were required to have been employed full-time by a company in the Bay Area and to have held their current positions for at least one year.

An independent panel of Bay Area lawyers helped choose the finalists, based on material submitted through the nomination process.

James Strother of Wells Fargo & Co. was presented a lifetime achievement award free credit scores.

Winners in the other categories are:

• Best General Counsel — Private Company: Hilary Krane, Levi Strauss & Co.

• Best General Counsel — Public Company (Annual Revenue Less Than $1 Billion a Year): Mary Doyle, Palm Inc.

• Best General Counsel — Public Company (Annual Revenue More Than $1 Billion a Year): Jim Brelsford, SanDisk Corp.

• Best IP Lawyer: Anirma Gupta, Intuit Inc.

• Diversity Champion: James Potter, Del Monte Foods Co.

• Best Labor & Employment Lawyer: Roxane Marenberg, Cisco Systems Inc.

• Best Biotech / Health Care Lawyer: Sandra Wells, Affymetrix Inc.

• Best Solo General Counsel: Rebecca Hlebasko, Bridge Housing Corp.

• Best International Lawyer: Harry Turner, Renesas Technology America Inc.

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Japanese Financial Services Minister Shizuka Kamei said the central bank should contemplate directly purchasing government debt, increasing political pressure for the policy board to overcome deflation.

“The central bank should consider underwriting debt to help the government create funds for fiscal stimulus,” Kamei said at a parliamentary hearing in Tokyo today. By law, the Bank of Japan is prohibited from buying debt directly.

Kamei’s remarks underscore the growing tension between the central bank and Prime Minister Yukio Hatoyama’s administration over how policy makers can fight price declines. Burdened by the largest public debt in the industrialized world, the government has little room to bolster spending and is urging the bank to take charge in beating the deflation that threatens the nation’s recovery from its longest postwar recession.

“The Bank of Japan is under siege with increasing government pressure and severe deflation,” said Hiromichi Shirakawa, chief Japan economist at Credit Suisse Group AG in Tokyo, who used to work for the central bank. “The market knows that bond purchases won’t be a panacea for deflation and they would hurt the BOJ’s independence.”

Having the central bank underwrite debt would give the government more access to funds, though it could also heighten investor concern about the nation’s fiscal discipline and drive bond yields higher. The yield on benchmark 10-year government debt rose to 1.31 percent at 1:13 p.m. today.

Fiscal Policy Needed

Kamei said the central bank alone won’t be able to eradicate price declines and that fiscal policy is also needed. Finance Minister Naoto Kan replied by saying fiscal discipline must always be exercised even though spending can help prop up the economy.

“It’s necessary to provide funds for bold fiscal spending” with direct purchases of debt from the central bank, said Kamei, who heads a junior coalition party. “Without fiscal stimulus funds, Minister Kan can’t resolve the economy’s output gap payday loans. He’s not a magician.”

The bank currently buys 1.8 trillion yen ($20 billion) of government debt from lenders each month. Bank of Japan Governor Masaaki Shirakawa has said the purchases are to provide liquidity and aren’t aimed at paying for government projects.

Kamei, head of the People’s New Party, has championed that increased government spending is key to spurring growth. Last year, he forced the government to delay unveiling a stimulus package he said was too small.

‘Show Its Commitment’

“Japan can’t overcome this economic crisis unless the Bank of Japan shows its commitment by going as far as” underwriting debt to pay for government spending, Kamei said.

Kan, a member of the ruling Democratic Party of Japan, has put heat on the central bank to do more to halt price declines and last month indicated he wanted Shirakawa to implement an inflation target. The finance chief said he wants to stamp out deflation as soon as this year and reiterated that he wants the bank to target inflation of 1 percent or higher.

“Given that various efforts to overcome deflation have failed, I won’t say we can immediately overcome this in a few months,” Kan said. “If I were allowed to be ambitious, I’d say I want prices to rise within the year” adding that “that is just my hope.”

Consumer prices excluding fresh food, the central bank’s key gauge of inflation, slid 1.3 percent in January from a year earlier, an 11th straight decline, the government said last week.

Shirakawa, also speaking to lawmakers, said he is committed to keeping policy very accommodative and that having the benchmark overnight lending rate at 0.1 percent has helped lower borrowing costs for companies.

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