Abe doesn't think Kuroda has BoJged his job

Commenting on the monetary policy statement of new Bank of Japan governor, Haruhiko Kuroda, Japanese prime minister Shinzo Abe said that he was happy that Kuroda had fulfilled his expectations.

Berenberg's Robert Wood:

Abe pledged to fire “three arrows” to end Japanese deflation and stagnation: monetary expansion, fiscal stimulus and supply side reforms. The BoJ just fired the monetary arrow.

The central bank action is as much about looks as substance. And this looks like a step change in determination at the central bank to tackle entrenched deflationary expectations.

The BoJ basically seems to be going for asset purchases Fed-style. It is doubling monthly purchases of JGBs, extending the maturity of bonds that can be purchased up to 40 years, and have pledged to continue at that pace of purchases “as long as it is necessary” to get inflation up to 2% and ensure it stays there.

The BoJ are aiming to reach 2% inflation within two years. That will be a challenge given that inflation has rarely been positive in the last twenty years. This plan stands a better chance than many of its predecessors of breaking that dreadful record.