BOJ Must Go Easy with QE

Bank of Japan Gov. Haruhiko Kuroda expressed impatience with the pace of Japan’s structural reform in an interview last week with The Wall Street Journal. For Stanford economist John Taylor, Mr. Kuroda has the diagnosis right, but there’s not much he can do about it.

Mr. Taylor has been a prominent critic of the U.S. Federal Reserve’s massive bond-buying program, an attempt to push down long-term interest rates and help growth. By his reckoning, the Fed risks provoking economic turbulence when it comes time to sell its bond portfolio, which could push up interest rates too sharply.

In an interview in Singapore, Mr. Taylor said the Bank of Japan faces “similar risks” after it embarked last year on its own bond-buying enterprise, seeking to end more than a decade of deflation.  The BOJ’s monetary stimulus has helped spark inflation in Japan and fueled the longest economic growth streak in four years. As the initial jolt to prices wears off and economic growth slows, the bank is now considering another round of asset purchases.


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