Ex-Currency Chief Sees Bank of Japan Exit Nightmare on Debt Pile
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Japanese government debt twice the size of the economy will make exiting stimulus a nightmare for central bank Governor Haruhiko Kuroda, according to the nation’s former top currency official.
Makoto Utsumi, who oversaw foreign-exchange policy at the Ministry of Finance from 1989-1991, said the Bank of Japan’s expansion of its balance sheet into debt with an average remaining maturity of up to 10 years makes it impossible for Kuroda to pare stimulus “for the foreseeable future” without causing bond yields to surge. Speculation that the BOJ will accelerate its note purchases helped push two-year yields below zero percent on Wednesday for the first time since January.