Bloomberg Haruhiko Kuroda TOKYO -- Japan's central-bank chief predicted victory in his battle to root out the deflation that has long sapped economic vitality in the world's third-largest economy, but expressed impatience with the government's pace in cutting red tape and encouraging businesses to invest more.
"Implementation is key, and implementation should be swift," Bank of Japan Gov. Haruhiko Kuroda said in an interview with The Wall Street Journal. "The major work to be done is by the government and the private sector."
Kuroda's comments mark an important shift in tone more than a year after he was tapped by Japanese Prime Minister Shinzo Abe to engineer a newly aggressive monetary policy. The resulting "bazooka" of stimulus actions, including the purchase of trillions of yen in government bonds and other assets, has fueled Japan's longest economic growth streak in nearly four years and a steady stream of positive inflation readings.
Despite signs of progress, Kuroda warned in the interview that the longer-term triumph could be relatively hollow if Abe doesn't step up his campaign for deeper, structural changes that go far beyond monetary policy. Unless the Abe administration follows through soon, "the real growth rate may be disappointing," Kuroda said. "That is not good for the economy, not good for the society."
In response to the prod for more action, Abe said in a separate interview with the Journal that he already has moved aggressively to shake up entrenched sectors of Japan. Additional proposals will be unveiled in late June.
"We have implemented complete liberalization of the retail electricity market" and scrapped a 40-year-old subsidy to cut rice planting, Abe said. "Many of these were areas where reform was believed not possible, but we've made them happen."
Abe added: "Structural reforms are a never-ending theme for the Abe administration."
Kuroda also signaled concern that a sustained rise in the value of the yen could undermine gains already made. While previous Bank of Japan governors have traditionally avoided openly discussing exchange rates, Kuroda in the interview said investors shouldn't expect the yen to rise further, even as it flirts with its highest levels in months. "I don't think it's reasonable to expect the yen to appreciate against the dollar," Kuroda said.
Kuroda's comments were a strong sign that he plans to tackle broader issues that traditionally haven't been part of the Bank of Japan's turf, even if that means taking a more aggressive tone than Abe. The prime minister put Kuroda, a financial-policy veteran and longtime critic of the central bank, in charge of the Bank of Japan in March 2013.
Read the full article at WSJ.com.
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