Japan’s Brave New Monetary Era

The Bank of Japan’s new governor, Haruhiko Kuroda, didn’t disappoint investors with his announcement yesterday: He plans for the biggest, fastest unconventional monetary stimulus any large economy has ever seen. By definition, financial markets never expect “shock and awe,” but they expect it least of all from the hyper-cautious BOJ. For once, for the first time anybody can recall, “shock and awe” is what they got.

On balance, this bold move is the right one. Prime Minister Shinzo Abe and his government now need to do their part. There’s no risk-free exit from Japan’s economic woes. Nonetheless, with a combination of long-term fiscal control, supply-side reform and an end to deflation -- Kuroda can deal only with the third piece -- Japan’s prospects can finally improve.