Abe Advisor Says It’s Time To Pull The Plug On QE

zerohedge.com / by Tyler Durden / Apr 3, 2017

In what may be one of the few sane policy recommendations to emerge out of Japan in years, Nobuyuki Nakahara, an adviser to Prime Minister Shinzo Abe and an influential former Bank of Japan board member said the BOJ should make a “clean break” from its current policy
approach when Kuroda’s term ends next spring, roughly at the same time as Yellen’s term is ending (at which point a Trumpian Fed is said to arrive).  According to Nakahara, Kuroda’s successor should announce a “second phase” of the BOJ’s quantitative-easing program that end the BOJ’s attempts at “yield control” and slashes purchases of JGBs by at least half, Dow Jones reported.

He described the central bank’s efforts to control the yield curve as an attempt to make up for the “mistake” of introducing negative interest rates in early 2016.

In a radical – and accurate – departure from the status quo which will inevitably result in currency collapse and hyperinflation, controlled Inflation in Japan would return thanks to the correction in the yen’s strength, the tightening of the labor market to full employment and a tick-up in wages, the former central banker said, so the bank should scale back its efforts to fuel it. If the bank is reluctant to act so boldly, it should commit to buying only as many JGBs as needed to reach 2% inflation by 2023 at the latest, he added.

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