April 10, 2023: On Friday, Haruhiko Kuroda took a less dovish tack in his farewell as central bank chief of Japan, ending a decade of unconventional policy such as a “bazooka” of stimulus to boost inflation and sustainable growth.
Handing reining of the Bank of Japan (BOJ) to academic Kazuo Ueda, Kuroda pointed to continuous his radical easy-money policy, which came to a push to change public views with a wall of money and Peter Pan metaphors.
“Japan’s 15 years of deflation is creating a strong perception among the public that cost and wages won’t increase,” Kuroda, 78, told a news conference marking his second five-year term.
“But such a perception is starting to change. As such, I think the timing for getting the BOJ’s inflation target stably and is nearing,” he stated.
Picked by Prime Minister Shinzo Abe to break Japan out of deflation, Kuroda will witness a five-year term ending on Saturday and hand over the baton to his successor.
Shock therapy was among the critical features of Kuroda’s monetary experiment. The BOJ deployed a substantial asset-buying programme in 2013 partly to appeal to the public that prices would finally rise after decades of deflation.
Kuroda was not the initial BOJ chief to attempt to influence public perceptions with monetary, which eased. Toshihiko Fukui, who presided over from 2003 to 2008, frequently quantitative easing to “show the BOJ’s determination to beat deflation” and “exert a stronger influence on public expectations.”
But Kuroda went further by binding policy to his 2% inflation aim and has set a two-year timeframe for discussing the goal. The target remained elusive until the Ukraine war improved global commodity costs and pushed inflation well above 2%.
Simple communication was a key feature of Kuroda’s policy. In 2015, he was alluding to the Peter Pan fairy tale to explain that to fire up inflation; the BOJ needs to have the public believe in its monetary thing with massive stimulus.
“I entrust that many of you are known with the story of Peter, in which it stated, ‘The moment you doubt if you can fly, ceasing to be able to do it’,” he said. “Yes, what we need is a good attitude and conviction.”
In one speech that year, Kuroda stated how “tremendous velocity” was needed to finish Japan’s deflationary equilibrium like a spacecraft trying to move away from Earth’s gravitation.