Reuters reports that according to “current and former central bankers familiar with internal discussions” an informal debate is under way in the Bank of Japan (BOJ) on how to prepare for an exit from quantitative and qualitative monetary easing.
The article notes:
- Inflation now past the half-way mark and signs that the economy has weathered last month’s sales tax increase, “Japanese central bankers are already thinking about the next chapter”
- Kuroda is keen to avoid market confusion and volatility that the U.S. Federal Reserve triggered in May 2013 when it first signaled the possible “tapering”
- The BOJ has no plans to trim the stimulus or publicly suggest the eventual drawdown any time soon “say those familiar with the internal debate”
- There is a strong sense within the BOJ board that the stimulus so far has worked well and the next step, albeit distant, could be policy tightening, not further easing
BOJ deputy governor Iwata said yesterday (Ryan had the headlines) that the 2% inflation goal cuts both ways:
BOJ will take appropriate steps in line with framework of it’s price target should economy overheat and inflation rises above 2%
–
More at the link (above)
