After the ‘Bazooka’, the Bank of Japan Is Dismantling its Radical Chief’s Work

After years of shock and awe Bank of Japan is quietly rolling back radical policies introduced by its bold chief Haruhiko Kuroda Pioneering and pioneering controversial new measures that blur the line between Central Bank and politics.

According to insiders, the central bank has considered top candidates to replace Kuroda, whose term ends in 2023, news outlets said on Monday.

Amamiya and his chief lieutenant, Shinichi Uchida, made Kuroda’s complex policy framework (a product of many years of unsuccessful attempts to revive stagnant consumer prices) easier to handle and ultimately have been working behind the scenes to bring Japan back to normal interest rate settings. The economy is suffering from a pandemic.

This means that two ambitious technocrats are pushing banks into schemes adjacent to industrial policy, such as those designed to promote banking sector consolidation and green finance.

Although not officially reported, the most decisive and up-to-date move in policy direction is the March meeting, which announced that the Bank of Japan is no longer committed to a fixed program of risky asset purchases, and finance. It was an unobtrusive sign of delaying support.

“The March move laid the foundation for the final policy normalization,” said Kuroda’s close associates, who have knowledge of central bank policy deliberations.

An explanation of this event before and after the March meeting was given to more than 20 incumbent and former central bank and government officials, ruling and opposition legislators and scholars with direct or indirect knowledge of monetary policy decisions.

“Current stimulus cannot last forever and must be rolled back at some point,” said a former BOJ policymaker involved in the March decision.

Officially, the March change will extend the life of the stimulus policy backed by Kuroda, who was once seen as a bold visionary who could shock the economy from deflation in his “bazooka” asset purchase program.

But insiders say there was another motive: paving the way for the final withdrawal from these very policies.

Although that intention was hidden from the market, it is a symbol of Kuroda’s bold experiment based on textbook theory that strong financial behavior and communication can affect public price expectations and boost inflation.

Hirohide Yamaguchi, a former BOJ deputy governor, said, “It seems that the Bank of Japan is always trying to prove itself by doing new things.” “It has become clear that the Bank of Japan cannot influence or shape the way people think like jelly.”