Coronavirus News Asia

Bank of Japan opens bond-buying flood gates

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As economists hit the books on the dire days of the 1930s, it only seems fitting that the Bank of Japan might be dusting off Korekiyo Takahashi’s playbook from that depression-ravaged period.

Takahashi is often called “the John Maynard Keynes of Japan” for his aggressive reflation efforts nine decades back. He’s a highly complicated figure in Japanese history, serving as BOJ governor, finance minister and even prime minister before his spectacular 1936 death by assassination.

The policies Takahashi championed have returned to the conversation thanks to Prime Minister Shinzo Abe’s reflation push. In June 2013, Abe said the “example of my forerunner Takahashi has emboldened me,” causing the name to trend on Google and Twitter.

Now, Takahashi’s views appear to be trending at BOJ headquarters as never before, too.

Too little too late?

On Monday, the BOJ removed the cap on government bond purchases. By essentially pledging unlimited bond-buying, BOJ Governor Haruhiko Kuroda’s team follows the Federal Reserve’s plans to hoard debt “in the amounts needed” to stabilize growth amid coronavirus fallout.

This moves Tokyo beyond anywhere it’s taken policy in generations. The big question is: can the BOJ put a floor under Japanese growth or is it too little too late?

Though the odds favor the latter, the former can’t be ruled out.

At issue is whether Kuroda and company can indeed dispense with the caution that has plagued quantitative easing efforts since 2013.

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