Ex-BOJ Official: The central bank has hit normalization limit under Kuroda

“The Bank of Japan (BOJ) has reached the end of the line on normalization for now,” Hideo Hayakawa, a former senior central bank official, said in a Bloomberg interview on Thursday.

Additional quotes

“Unless the current leadership suddenly says it’s gotten policy wrong all this time, it’s pretty much done all it can,” 

 the pandemic has underlined the importance of fiscal policy in helping the economy rather than a monetary approach.   

A key point of the adjustments was making the buying of exchange-traded funds more flexible.

The BOJ had already made its bond-buying more flexible by changing its focus to interest rates in 2016 and by removing a purchasing guideline last year.

“It’s not worth making problems bigger and bigger through a massive bond or ETF buying.”

“Those purchases aren’t bringing the bank any closer to its inflation target.”

Market reaction

USD/JPY is currently trading under pressure just below 108.00, undermined by the US dollar’s weakness and falling Treasury yields.

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