Japan’s Money Printers Will Soon Be Under New Management
Markets are betting the just-nominated central bank governor will chart a path out of negative-rate territory.
Bank of Japan headquarters in Tokyo.
Photographer: Yoshio Tsunoda/AFLO/Alamy
A decade ago the Bank of Japan led the way with an unprecedented experiment in monetary stimulus. To support Abenomics, named after then-Prime Minister Shinzo Abe’s aggressive bid to revive an anemic economy, the central bank massively increased purchases of government securities and eventually moved to cap yields on government debt. With the benchmark interest rate already negative, the combined effect was like having gigantic money-printing machines running constantly at full tilt.
Now, with inflation running well above the BOJ’s comfort zone, policymakers are having to ponder how best to make a monetary policy pivot that doesn’t spook markets.