Markets believe the Bank of Japan’s reflationary credentials will be burnished by new board member Yutaka Harada this month, but a closer look at his views suggests he is unlikely to back an early expansion in the bank’s massive monetary stimulus.
The 64-year-old Waseda University economist certainly believes, like BOJ Governor Haruhiko Kuroda, that monetary stimulus, if deployed aggressively enough, can reflate Japan out of two decades of falling prices and fitful growth. And he believes the means, buying government debt, carries little cost because the BOJ can print yen without limit.
Such views, more aggressive than those of the man he will replace, Ryuzo Miyao, have fueled expectations that Harada shares Kuroda’s ‘whatever-it-takes’ approach to hitting the BOJ’s 2 percent inflation target, and would support further easing to reach the goal in the fiscal year starting in April.
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