Japan’s success in rekindling inflation is raising the stakes
for policy makers to map out the endgame for monetary stimulus, given the risk
of a surge in yields when the Bank of Japan winds down bond purchases.
With the BOJ’s benchmark inflation gauge past halfway to
Governor Haruhiko Kuroda’s 2 percent target, yields on 10-year government
securities are still the world’s lowest at 0.67 percent -- held down by central
bank purchases of unprecedented scale. Even so, Kuroda, who meets with fellow
board members next week, says it’s “too early” to discuss an exit strategy.
In the absence of the BOJ, investor demand for compensation
from inflation could send the government’s borrowing costs surging, fueling the
danger of a collapse in confidence in the fiscal sustainability of the world’s
third-largest economy. Kuroda should start thinking about “disengaging” now,
according to economist Richard Koo.
“It may be too late to prevent long-term rates doing something
crazy” should the BOJ hold off on tapering before inflation reaches the target,
said Koo, a former Federal Reserve economist who wrote “The Holy Grail of
Macroeconomics -- Lessons from Japan’s Great Recession.”
The BOJ’s board will maintain its pledge to expand the
monetary base by an annual 60 trillion to 70 trillion yen ($668 billion) in a
two-day meeting starting Jan. 21, according to all 36 economists in a Bloomberg
News survey.
(Source: Bloomberg)
Tidak ada komentar:
Posting Komentar