Investors will lose confidence in Japan’s economic revival unless Prime Minister Shinzo Abe adds substance to his growth strategy and relies less on stimulus measures, said a former senior central bank official.
The Bank of Japan will wait at least until the second quarter of 2014 before deciding whether to add more stimulus, as it gauges the impact of an April sales-tax increase, said Atsushi Mizuno, a former BOJ board member.
Haruhiko Kuroda will have limited options for aggressive easing if he’s confirmed as central bank governor as more Japanese government bond purchases heighten the risk of a market bubble, a former BOJ policy board member said.
Governor Masaaki Shirakawa expanded the Bank of Japan’s assets by 50 percent, introduced an inflation target and safeguarded his nation’s banking system from shocks. Yet when he announced he was leaving three weeks early, stocks soared to a four-year high.
The Bank of Japan maintained its unprecedented plan to boost money supply at a policy meeting today, and predicted inflation will almost match its target in two years even after a report highlighted deflation’s grip.
Bank of Japan Governor Haruhiko Kuroda gave himself two years to do “whatever it takes” to end deflation and revive the world’s third-largest economy. He may have less than half that time to produce results.