BOJ’s Kuroda May Be Losing Credibility

Bank of Japan (BOJ) Governor Haruhiko Kuroda has frustrated investors with his habit of surprising markets, and now the central bank’s latest inflation forecast has some questioning his credibility.

“Now that the BOJ has admitted to failing to meet its target and put its credibility on the line, the risk is that another round of asset purchases could provoke a negative reaction,” said Hiroaki Hayashi, at Fukokushinrai Life Insurance director of investment management, who expects the BOJ to ease further in April.

On Wednesday, the BOJ cut its inflation forecast for the fiscal year starting in April 2015 to 1.0 percent, half of the 2 percent target it set nearly two years ago. The central bank cited the around 50 percent decline in oil prices over the past six months for the updated forecast, which was lower than many analysts had expected.


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