Former Federal Reserve Chairman breaks down the BOJ
The champion of US experimental policy has weighed in on the latest moves from the Bank of Japan.
He noted the "muddled" market reaction to the move and speculated that's because nothing has really changed.
"The announced target for the ten-year JGB yield is close to its current market rate, and no significant changes were made to other parts of the BOJ's program, including the negative interest rate on bank reserves, still at -0.1 percent," Bernanke wrote.
Still, overall he said the announcement was 'good news' because of the recommitment to the goal of ending deflation in Japan. But he worries that the public could question the BOJ's commitment to is critical and that the follow-up will be crucial.
He also pointed out the "puzzling" logical gap of maintaining the 80T yen QE program at the same time. The issue is that the BOJ has pegged 10-year yields and it can't know the cost of that. It really depends on how much the market buys or sells, which is something Kuroda seemed to acknowledge in the press conference.
Overall, his view sounds constructive but he's not exactly glowing.
