The Bank of Japan’s governor, Haruhiko Kuroda, has become the second longest serving head of the central bank, promising to achieve 2% inflation in 2013 through a major monetary easing policy called “Kuroda Bazooka.”
However, Kuroda’s term is expected to end in April 2023, and fulfilling his promise to reach the inflation target is new as the longest-serving chief in central bank history dating back to 1882. It may be much more difficult than setting a record.
Mr. Kuroda passed Masamichi Yamagiwa, who was the governor of the Bank of Japan from November 1956 to December 1964, in second place, and the service time on Wednesday was 2,941 days.
Mr. Kuroda is 76 years old and has about two years of incumbent, and he will be the longest-serving chief of the Bank of Japan by following the 3,115 days served by Hisato Ichimada from June 1946 to December 1954. It is likely to be. Impact on finance and other industries.
Mr. Kuroda is a financial expert, served as the country’s top currency diplomat after the Asian financial crisis that broke out in 1997, and was the president of the Asian Development Bank.
The BOJ’s series of measures taken under Kuroda, including the aggressive purchase of assets such as Japanese government bonds and exchange-traded funds, has so far failed to bring Japan closer to its 2% target. Hmm.
The monetary base (central bank distribution funds and checking deposits), which is one of the indicators of the degree of monetary easing, reached a record high of 643.61 trillion yen (5.8 trillion dollars) at the end of March while the BOJ’s balance sheet was expanding. did. ..
In mid-February, a month before the Bank of Japan reviewed its policy tools, Kuroda admitted that it is still difficult to reach the 2% target in 2021, 2022 and even 2023. Must be. ” A brace for long-term monetary easing.
The Bank of Japan initially aimed to achieve 2% inflation in two years, but then repeatedly postponed it. Kuroda promised to reach his goal “as soon as possible” without specifying when.
The core consumer price index, excluding perishables, fell 0.4% in February from a year ago. The central bank plans to announce the price outlook for 2023 in late April.
Kuroda said the Bank of Japan’s unprecedented monetary easing has brought benefits such as economic recovery, growth in corporate profits and rising wages. However, according to the governor, an unexpected coronavirus pandemic has undermined these improvements.
In March, the Bank of Japan held a broad framework of keeping short-term interest rates at minus 0.1% and long-term interest rates, while maintaining some of the new side effects of longer-than-expected easing. I made some adjustments. Almost zero percent.
The Bank of Japan is now able to move long-term interest rates to a wider extent than before as it seeks to bring its bank’s growing presence back to the bond market.
Already a top holder of domestic stocks, but only when necessary, buy investment products, including ETFs or stocks that track the Tokyo Stock Price Index.
Banks’ net assets swelled to 714.23 trillion yen at the end of March, with Japanese government bonds accounting for more than 70% and ETFs accounting for about 5%.
Kuroda and the Bank of Japan watchers agree that it is still premature to talk about the escape from the steps that led the central bank to an unknown territory.
The governor has dispelled the risk of returning to nightmarish deflation for policy makers, despite claiming that the Japanese “deep-rooted” view that prices are unlikely to rise remains.
The coronavirus pandemic raises the possibility that wage growth will slow as economists expect it to take longer to recover from the economic downturn.
On the price side, under pressure from Prime Minister Yoshihide Suga, some retailers are cutting prices and major mobile phone companies are cutting data charges.
“Theoretically, when more money is in circulation, prices go up. But the problem is that even with Kuroda Bazooka, consumers don’t get much money,” said Daiwa Securities. Toru Suehiro, a senior economist, said.
“It will be difficult to discuss withdrawal (from accommodative monetary policy) before Mr Kuroda’s term ends and he is ready to ease continuation,” he said.
“The need for a legacy of the BOJ’s chieftain will shift the focus to supporting green investment and strengthening the central bank’s commitment to digital currencies,” Suehiro said.
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