In short, it is time for the BOJ to admit that monetary policy is absolutely necessary, but not sufficient, to bring back lasting inflation.
The keypoints of this report include,
- The Bank of Japan has abandoned the pretense that it can achieve its 2% inflation target in two years, or any other particular timeframe
- In the face of pressure from private banks, it refrained from going more deeply into negative rate territory regarding bank reserves at the BOJ
- In another so-called “new framework” it has switched its main operating target: from an increase in the monetary base to keeping 10-year bond yields at zero
- The BOJ also issued a Comprehensive Assessment of why it failed to meet its 2% target, but there is not a lot of culpa in its mea culpa; it keeps insisting that its policy will eventually work
- There is no talk of what is really needed: a fiscal-monetary combination