The Bank of Japan (BoJ) under new Governor Kuroda is broadly following the same policy of his predecessor, ie, buying Japanese government bonds (JGBs). The main differences are Kuroda intends to buy more and longer term JGBs than his predecessor. We are sceptical BoJ buying of JGBs will stimulate the Japanese economy enough to end deflation (FX Strategy – Why the BoJ won’t achieve its 2% inflation target, 15 March 2013). We doubt that by following the same policy as his predecessor, Kuroda will get a different result for Japan. In this note we evaluate how Kuroda’s Quantitative and Qualitative Easing (QQE) policy is tracking against his three criteria.
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Commonwealth Bank