The Bank of Japan Can’t Jump-Start Inflation

On May 29 the Japanese government announced that the country’s consumer prices were unchanged in April from a year earlier, calling into question the power of the central bank’s effort to drive prices upward. The BOJ is acting a bit like a hedge fund, trying any investment to achieve its goal of raising inflation to 2 percent. It’s snapping up not only government bonds but also exchange traded funds, corporate bonds, real estate investment trusts, and venture capital loans—anything to put more money into lenders’ and investors’ hands so they can lend and invest more. “The BOJ deserves the most aggressive award among central banks,” says Yasuhiro Takahashi, a senior economist at Nomura Securities.

The latest consumer price report underscores the difficulty of the central bank’s task. BOJ Governor Haruhiko Kuroda doubled down last October and expanded his policy, formally known as quantitative and qualitative monetary easing. The central bank pledged to raise the monetary base from 60 trillion yen ($482 billion) a year to 80 trillion yen to give banks more money to lend.