Kuroda May Have Done Us a Favor Despite the Drama

The Bank of Japan may have done the world a favor. The central bank’s shock move to rein in its ultra-easy monetary policy offers a peek into some of the surprises that await the world. Thrills and spills will come in 2023, even if their scale doesn’t match the Tokyo bombshell.

As historic as the rapid interest-rate increases in most major economies have been in 2022, at least the trajectory of policy direction was clear. Persistently high inflation and a late start to tightening demanded an aggressive campaign, especially from the Federal Reserve, but also in the UK, the euro zone, Australia and New Zealand. Even those that got a slight head start on the Fed kept hiking relentlessly. You may not have known the precise size of the next move, but you had a pretty reasonable idea. Borrowing costs were going up, up, up.