Apparently under pressure from some members of Japan's parliament (who are likely being screamed at by the firms and people that bought and voted for them) as they question the possibility of JPY dropping to 170 per USD, BoJ Chief Haruhiko Kuroda proclaimed yesterday that "monetary policy can prevent hyperinflation," but don't worry because he "doesn't think Japan will experience hyperinflation." Well that's a relief because all his other predictions about how well Abenomics would work have been utter failures. Perhaps Kuroda should listen to ex-BoJ chief economist Hideo Hakayawa [8] who stunningly suggested, The BOJ should start paring its unprecedented easing soon or risk hurting people, "it’s important to quit while you’re ahead."
Bank of Japan Governor Haruhiko Kuroda says doesn’t expect yen weakness to go that far when asked in parliament today about possibility of currency dropping to 170 per dollar...
- *KURODA: WEAK YEN IN LINE WITH FUNDAMENTALS IS POSITIVE OVERALL
- *KURODA: WEAK YEN CAN DEPRESS NONMANUFACTURING, REAL INCOMES
- *KURODA: FX HAS EFFECT ON COMPANIES' OVERSEAS BUSINESS
- *KURODA: CAN'T NECESSARILY SAY YEN DECLINE WILL GO THAT FAR
- *KURODA: HAVEN'T SET ANY DEADLINE FOR BOJ'S EASING
- *KURODA: WON'T LET PRICES CONTINUE TO RISE AFTER REACHING 2%
- *KURODA: TOO EARLY TO DISCUSS CONCRETE STEPS ON EXIT POLICY
And
- *KURODA: DON'T THINK JAPAN WILL EXPERIENCE HYPER INFLATION
- *KURODA: CAN PREVENT HYPER INFLATION WITH MONETARY POLICY
So - all good then?
Well no - as the Japanese central bank’s former chief economist, Hideo Hayakawa, suggests... [8]
The BOJ should start paring its unprecedented easing soon or risk hurting people, Hayakawa said in an interview. Pushing inflation to a 2 percent target in a short period will raise living costs without boosting employment or growth, he said.
“It’s important to quit while you’re ahead,” said Hayakawa, who was an executive director at the BOJ until March 2013. “Basically, drop the two-year reference, keep the 2 percent target and taper slowly.”
The remarks underscore the risks Governor Haruhiko Kuroda is taking to reflate the world’s third-biggest economy with a stimulus program he began in April last year. While the BOJ is still winning its “gamble” with its stimulus, it shouldn’t push its luck, Hayakawa said.
“The secret to success is declare victory while you’re winning,” he said.
...
Growing public criticism of the yen’s recent weakness means the BOJ can’t stick to its current plan to reach 2 percent inflation, he said.
“The short cut to achieving the 2 percent target is through a weak yen but that goes against public sentiment,” Hayakawa said. “It’s not good to go too far and get wounded later.”
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