TOKYO -- Although the Bank of Japan's pivot toward interest rate controls has been the subject of much interest, Gov. Haruhiko Kuroda was mostly focused on an entirely different issue when forming the new monetary framework: how to ensure the ultraloose stimulus continues even after he steps down.
On Sept. 21, which capped the two-day monetary policy meeting, the BOJ vowed to keep expanding the monetary base until the inflation rate exceeds the 2% threshold "and stays above the target in a stable manner." The conventional wisdom in the U.S. and Europe is that central banks should aim for price increases of 3-4%. That view was a hot topic during the late-August gathering of central bankers in Jackson Hole, Wyoming, which Kuroda attended. Deflation is becoming a bigger risk than inflation, goes the argument.
