Bank of Japan Gov. Haruhiko Kuroda's reappointment, which the government proposed to the Diet on Friday, is aimed at giving the highest priority to overcoming deflation and stabilizing financial markets.
The central bank is expected to persistently continue with its massive monetary easing policy under Kuroda, including purchasing large volumes of government bonds.
However, there is a bumpy road ahead for the BOJ.
When Kuroda was appointed as governor in 2013, he laid out a goal of achieving an inflation rate of 2 percent in about two years. Under the current easing policy, however, the inflation rate has remained at the 1 percent level.
Even if the central bank maintains its monetary easing policy, it is unclear whether the inflation rate will reach 2 percent at an early stage.
It would also be difficult for the BOJ to expand its easing policy. The BOJ has continued purchasing government bonds on a large scale since 2013. As a result, it holds 40 percent or more of all outstanding government bonds. It is unrealistic for the bank to continue buying bonds at a higher rate than it is currently.
The BOJ's monetary easing policy is to be corrected eventually. But it is unclear how long the Japanese economy will be able to maintain its current performance.
Additionally, the status of the United States as a global economic leader is not guaranteed. The United States has become the epicenter of the recent turmoil in global stock markets.
The Bank of Japan will face difficulties in handling its monetary policies.
Read more from The Japan News at https://japannews.yomiuri.co.jp/
