“The monetary bazooka supposed to wake up Japan will not have been enough”


ATn the land of the Rising Sun, there is no hesitation in taking late retirement. At the age of 78, Haruhiko Kuroda, the governor of the Bank of Japan, chaired, on Friday March 10, his last council at the head of the institution. His successor, a 71-year-old “kid”, Kazuo Ueda, was officially dubbed the same day by Parliament.

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Mr. Kuroda leaves with a mixed record. Its real activism will not have been enough to awaken Japanese growth. Former Prime Minister Shinzo Abe (2012-2020) had however entrusted him, in 2013, with a monetary “bazooka” supposed to wake up the sleeping beauty. Paralyzed by Japanese stagnation and deflation, fueled by the aging of the population, the head of government had multiplied exorbitant stimulus plans. It is up to the central bank to buy back most of the country’s enormous debt.

To add fuel to the machine, Haruhiko Kuroda had not hesitated to lower interest rates below zero and to maintain them there against all odds until today. To facilitate the task of the government, it had also innovated, by fixing a maximum yield on the securities of debt of the Japanese State, repurchasing the obligations in the event of going beyond.

Explosion of energy prices

This very generous policy was also that of Western central banks after the 2008 financial crisis and to deal with sluggish inflation.

For the first time in forty years, inflation started up again and stood at 4.2% in January in the Japanese archipelago

This is no longer the case today in the United States or in Europe, where galloping inflation has led central banks to raise their interest rates at full speed in order to curb sudden inflation. Caused by the combination of an overly vigorous post-Covid-19 recovery and the explosion in energy prices, this seems to be sustainable.

In Japan, however, nothing happens like elsewhere. However, the country is suffering from the same rise in energy and raw material prices. For the first time in forty years, inflation picked up again and stood at 4.2% in January. But the placid Mr. Kuroda has not changed his practice and maintained, on Friday March 10, his negative interest rates.

It is up to his successor, who for the first time in the history of the institution will be an economist, to get out of a lax policy that is cracking on all sides. Once, when asked about his politics, the old governor quoted the young Peter Pan: “The day you stop believing you can fly, you can never fly again. » The return to earth seems close.


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