Last Friday, the Bank of Japan disappointed investors hoping for radical stimulus.
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The BOJ's radical stimulus program has had some unintended consequences, as years of low rates hurt financial institutions' profits.
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Annual core consumer inflation hit 0.9% in April, still far from the BOJ's 2% target, despite years of radical stimulus.
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That change met stiff resistance from some BOJ board members, highlighting the massive internal challenges it faces in maintaining radical stimulus policies.
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BOJ Governor Haruhiko Kuroda deployed a radical stimulus program in 2013 in the hope of breaking the deadlock, but with little success.
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The BOJ launched its radical stimulus program in 2013 to meet its pledge to achieve 2 percent inflation in roughly two years.
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Some policymakers have voiced concerted, public opposition to more radical stimulus measures, particularly the restarting of bond purchases, known as quantitative easing.
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Annual core consumer inflation hit 0.9% in April, remaining distant from the BOJ's 2% target, despite years of massive and radical stimulus.
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With the cost of prolonged easing rising, Kuroda's biggest task would be to engineer a smooth exit from his radical stimulus program, analysts say.
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But he shrugged off calls from critics of his radical stimulus program to abandon the BOJ's 2 percent inflation target or dial back monetary support.
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The key task of the new BOJ leadership would be to telegraph its plan to unwind the bank's radical stimulus, without spooking markets, analysts say.
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Abe said last week the BOJ's ultra-easy policy should not last forever, signalling his hope of laying the path toward an exit from a radical stimulus programme.
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Among major central banks, the BOJ has the least options left as years of radical stimulus measures have failed to achieve its 2 percent inflation target, Momma said.
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Subdued inflation has forced the BOJ to maintain its radical stimulus program despite the rising demerits, such as the hit to financial institutions' profits from prolonged low rates.
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Abe said last week the BOJ's ultra-easy policy should not last forever, signaling his hope of laying the path toward an exit from a radical stimulus program.
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Amamiya, who had three years earlier won praise for spearheading Kuroda's radical stimulus, received daily visits from bank executives furious about low bond yields, which were crushing margins.
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The BOJ's increasingly radical stimulus efforts are being closed watched by other global central banks which are also struggling to revive growth, such as the European Central Bank.
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"Kuroda's radical stimulus kept interest rates low, allowing politicians to delay reforms to get Japan's fiscal house in order," said Koichi Haji, executive research fellow at NLI Research Institute.
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Policy hawks, who oppose radical stimulus, have spoken en masse but doves, who make up a majority in the Governing Council, have been unusually quiet in their public commentary.
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Stubbornly low inflation has forced the BOJ to maintain a radical stimulus program despite the rising costs, such as the hit to financial institutions' profits from years of low rates.
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Subdued inflation has forced the BOJ to maintain the radical stimulus program despite the rising costs, such as the hit to financial institutions' profits from years of near-zero rates.
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But she sidestepped questions on whether additional monetary easing could stave off unwelcome yen gains, or whether the cost of the central bank's radical stimulus program was exceeding the merits.
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Prime Minister Shinzo Abe said last week the BOJ's ultra-easy policy should not last forever, signaling his hope of paving the way toward an exit from the radical stimulus programme.
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But many in the nine-member board are wary of topping up an already radical stimulus given the rising cost of prolonged easing and a lack of tools to reflate growth.
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TOKYO (Reuters) - Japan's core consumer inflation wallowed at a two-year low in July, increasing pressure for the central bank to acknowledge price momentum was slowing and expand its radical stimulus program.
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"Six years have past since the BOJ deployed a radical stimulus and there's no sign inflation expectations are approaching its 2% price target," said Yasunari Ueno, chief market economist at Mizuho Securities.
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Years of heavy money printing have failed to drive up inflation, forcing it to maintain a radical stimulus program longer than expected and leaving it with little ammunition to fight the next recession.
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In Japan, there were signs sluggish domestic demand is picking up, though stubbornly low inflation likely mean its central bank will not pare back its radical stimulus until long after the Fed and ECB.
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But UBS economist Felix Huefner said he doubted that any radical stimulus measures would be taken soon, given that the German economy is expected to grow at its strongest pace in six years this year.
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Subdued inflation and the strengthening economy pose a dilemma for the BOJ, which is forced to maintain its radical stimulus program despite side-effects such as the drag on bank profits from ultra-low borrowing rates.
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The measures the BOJ took in July to make its policy framework more sustainable are a step forward, but not enough to address the diminishing returns and rising costs of its radical stimulus program, he said.
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Inflation remains distant from the BOJ's 2% target despite years of heavy money printing, forcing the central bank to maintain a radical stimulus program despite the rising cost such as the hit to financial institutions' profits.
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The rift underscores the policy challenges the BOJ faces as subdued inflation forces the central bank to maintain its radical stimulus program despite the mounting costs such as the hit of near-zero rates on bank profits.
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The results underscore the mounting cost of the BOJ's radical stimulus program that aims to cap short-term interest rates at minus 0.1 percent and 10-year government bond yields around zero percent through massive money printing.
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Similar manufacturing activity surveys from Europe and the United States later on Friday are expected to show strong growth, too, paving the way for a gradual rollback of the radical stimulus introduced after the global financial crisis.
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Wakatabe, a vocal advocate of aggressive monetary easing, also said the demerits of the BOJ's ultra-loose policy have yet to outweigh the benefits, rebuffing calls for the central bank to whittle down its radical stimulus program.
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Years of massive money printing have failed to drive up inflation to the BOJ's 2% inflation target, forcing the central bank to maintain a radical stimulus programme despite the strain it is inflicting on financial institutions' profits.
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While soft inflation keeps the BOJ from dialing back its radical stimulus, some BOJ policymakers have openly voiced concern over the rising cost of prolonged easing such as the negative effect of near-zero rates on bank profits.
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TOKYO (Reuters) - Bank of Japan Governor Haruhiko Kuroda said the central bank could debate conditions for exiting from ultra-easy policy if prospects for achieving its inflation target improve, reminding markets his radical stimulus program won't last forever.
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Asked about Prime Minister Shinzo Abe's comment on Friday that hinted at his hope of preparing an exit from the radical stimulus program in coming years, Aso said specific monetary policy was up to the BOJ to set.
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It was the first time that Kuroda, who until now had shrugged off as premature any debate over an exit strategy for the BOJ's radical stimulus program, has signaled the chance of offering such information to the public.
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TOKYO (Reuters) - Japanese Prime Minister Shinzo Abe said on Friday the central bank's ultra-easy policy should not continue forever, signaling his hope of laying the path toward an exit from a radical stimulus programme in coming years.
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The mixed batch of data underscores the challenges the Bank of Japan faces as heightened risks keep it from exiting its radical stimulus while a lack of policy ammunition makes it difficult to battle headwinds with additional easing.
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"The BOJ should not persist in achieving its price target both in terms of the timeframe and pace of price growth," as subdued inflation is forcing it to maintain a radical stimulus that is straining bank profits, he said.
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The BOJ chief also shrugged off criticism that the radical stimulus policy risked destabilizing Japan's banking system by squeezing returns on lending, stressing that bank profits have been on the rise even during years of ultra-easy monetary policy.
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The remark was the first time that Kuroda, who until now had shrugged off as premature any debate over an exit strategy for the BOJ's radical stimulus program, has signaled the chance of offering such information to the public.
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The remarks from Suzuki, a former commercial banker who joined the board in July, underscored the BOJ's dilemma as anemic price and wage growth forces it to delay normalizing policy, despite the rising cost of its radical stimulus program.
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Some officials close to the premier say it could cause a rift in his once close relationship with BOJ Governor Haruhiko Kuroda, whose radical stimulus measures have so far failed to lift Japan clear of two decades of deflation and stagnation.
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While his remarks do not suggest an immediate policy change, they leave the door open to a shift and underscore a growing sense in the BOJ that it cannot sustain its massive, radical stimulus without focusing on the policy's side-effects.
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TOKYO (Reuters) - Japan's core consumer inflation slowed in May and factory activity shrank in June, underlining the growing stress on the economy and keeping the central bank under pressure to expand its radical stimulus program, possibly as early as next month.
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The changes, although small, would be the first since 2016 and the latest sign Governor Haruhiko Kuroda is gradually walking away from his radical stimulus program deployed five years ago to shock the public out of a persisting deflationary mindset.
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The changes, although small, would be the first since 2016 and the latest sign Governor Haruhiko Kuroda is gradually walking away from his radical stimulus program deployed five years ago to shock the public out of a sticky deflationary mindset.
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Analysts have said, however, that a reappointment will diminish the chance of the BOJ deploying more radical stimulus measures, such as direct BOJ bank-rolling of government debt as advocated by other candidates for the job, including Abe's former aide Etsuro Honda.
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But Wakatabe said the BOJ did not need to persist with hitting its price goal at a set timeframe, and he had no preset idea on whether the economy needed more monetary support now, tempering expectations he might propose radical stimulus steps.
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TOKYO (Reuters) - Japan's lower house of parliament gave its approval on Tuesday for academic and reflationist Makoto Sakurai to join the Bank of Japan's divided policy board, a move seen as tipping the balance more in favor of Governor Haruhiko Kuroda's push for radical stimulus.
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The Bank of Japan's radical stimulus programme, which has pushed interest rates to near or below zero, is severely cutting into bank profits and could destabilize the sector in the not-so-distant future, said Naoki Ohgo, who advises Japan's Financial Services Agency (FSA).
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TOKYO, May 11 (Reuters) - The Bank of Japan should not continue its radical stimulus for too long given the strain ultra-low interest rates are inflicting on regional banks, said Seiko Noda, a cabinet minister considered one of the contenders to be the next prime minister.
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