Why does Japan want inflation if their Yen is already growing weaker?
In: Economics
Inflation means your money will buy you fewer goods tomorrow than it will today. Deflation is the opposite. Your money will buy you more in the future.
So imagine you have several sizable but delay-able purchases you need to make. Maybe a new car, new washing machine, etc.
Under an inflationary scenario, you want to make those purchases today while your money is worth more. If the value of your money stagnates or even declines, then you’re not as interested in making those purchases immediately.
Central banks usually target a healthy level of inflation to keep the economy active and keep people buying goods and services rather than stashing their cash and waiting for the future.
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