Names don’t matter, says Japan’s central bank chief Haruhiko Kuroda. That is why he did not name anyone when journalists asked him about the power struggle in the ruling LDP party. The LDP is holding its presidential election this Wednesday. Two female and two female candidates apply for the top position. Whoever wins becomes prime minister and has to watch, among other things, that Japan’s economy finds its way out of the corona low.
Kuroda is waiting. But there is one thing he wanted to give the rival quartet: He recalled January 2013, when Japan’s newly elected LDP government under Prime Minister Shinzo Abe and Japan’s Central Bank (BOJ) made a joint statement declaring that they would work closely together for price stability and economic growth. “The statement played an important role in supporting the economy,” said Kuroda. So with that in mind, he’ll continue. His message: The BOJ is not planning a real departure from its ultra-loose monetary policy.
For Haruhiko Kuroda, 76, this Wednesday is not only a special one because of the LDP election. It is his 3116th day in office, surpassing Hisato Ichimada, who ran the business from 1946 to 1954, as the longest-serving central bank chief in Japan. Kuroda would certainly not have set this record if he hadn’t been right with his almost brutal way of making money. He became BOJ boss in March 2013, handpicked by Abe, who had just freed the LDP from its first lengthy opposition period with his right-wing conservative program.
Kuroda once studied law in Tokyo and economics in Oxford. His civil service career in Japan led him to the post of Vice Minister of Finance. He then served as a government advisor before becoming President of the Asian Development Bank in 2005. He always said that Japan needs growth. And because Abe’s Abenomics program was ultimately nothing more than a major government stimulus measure, it should have fitted well into his worldview. Kuroda provided the tools to make Abenomics work. Bought massive amounts of government bonds, put banks under pressure with negative interest rates.
It cannot be said that Japan has developed into an agile innovation cluster in the process. Economic growth was rather sluggish. The inflation target of two percent remained unattainable. But prices were stable, Japan made a more vital impression than before. And Kuroda set a trend that the European Central Bank and the US Federal Reserve followed in a somewhat milder form. There was also little change in Japan’s monetary policy when Yoshihide Suga became Prime Minister after Abe’s resignation due to health problems in 2020.
And now? Japan’s economy is groaning in the second year of the pandemic. The banking sector is not doing well. Due to demographic change, social spending is growing. Prime Minister candidates Fumio Kishida and Taro Kono have indicated that they do not consider Abenomics to be the ultimate wisdom. While the right-wing populist applicant Sanae Takaichi speaks of a new form of Abenomics, which she appropriately calls Sanaenomics. So is Kuroda on your side? No names, as I said. Haruhiko Kuroda also knows: No matter who comes – no one can afford to change their monetary policy significantly for the time being.