Haruhiko Kuroda may need to talk his way out of a paradox he helped create.
Installed as head of the Bank of Japan in March, Kuroda aims to unlock borrowing and spending by lifting inflation expectations and wages after 15 years of deflation. Market volatility partly triggered by the BOJ’s record bond-buying now threatens to sap business and consumer confidence and weaken the campaign to reflate the world’s third-biggest economy
At a press briefing on May 22, Kuroda said that gains in yields could be expected as the economy improved, after previously saying that the BOJ aimed to lower interest rates. The central bank was forced to inject 2 trillion yen ($19.4 billion) into the financial system yesterday, its second market-calming infusion since Kuroda unveiled unprecedented stimulus, as stocks plunged the most in two years and bond yields rose.
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