BOJ bids final farewell to radical policy experiment

In rare criticism of its past policies, the Bank of Japan (BOJ) said former governor Haruhiko Kuroda's stimulus did not change consumer psychology as much as planned, continuing a symbolic shift away from his decade of policy radicalism.

In rare criticism of its past policies, the Bank of Japan (BOJ) said former governor Haruhiko Kuroda's stimulus did not change consumer psychology as much as planned, continuing a symbolic shift away from his decade of policy radicalism.

The review, released on Dec 19, also warned that the negative effects of Mr Kuroda's massive monetary stimulus - such as the strain the bank's huge quantitative easing exerted on the bond market - may last longer than expected and become bigger in future.

The findings of the review will reinforce the BOJ's resolve to steadily normalize monetary policy and be rid of the remnants of that era of unconventional easing.

"What I can say is there's bigger-than-expected uncertainty on the effect the BOJ's massive monetary easing may have had on public expectations," BOJ chief Kazuo Ueda, who replaced Mr Kuroda as governor in 2023, told a news conference on Dec 19, when asked about his predecessor's policies.

"There are various side effects too, some of which may not have appeared yet," he said.

Japan's 25-year experience of deflation and economic stagnation forced the BOJ to become a pioneer of unconventional policies such as zero interest rates and quantitative easing.