The Bank of Japan has recently been expressing greater concern about the impact of ultra-loose monetary policy on financial stability. But Governor Kuroda today insisted that the key focus of policy must remain on lifting inflation expectations and boosting price pressures. Given the likelihood that domestic demand will weaken after next year’s sales tax hike there is little prospect of policy tightening any time soon. The Bank of Japan was an early adopter of many unconventional monetary policy tools and will before long be the last major central bank still using them.
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