Was It Kuroda’s Waterloo, or Just Smart Planning?
Whether defeat or tactical withdrawal, the Bank of Japan’s retreat on easy money likely marked the final big shock in a year full of them.
Haruhiko Kuroda makes it easier for his successors.
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The great 19th century Austrian diplomat Count Metternich is supposed to have reacted to the news of the death of his French opposite number Talleyrand with the words: “Whatever did he mean by that?” This story might be apocryphal. Some Googling revealed an equally confident assertion that it was Talleyrand himself who said this, on hearing the news of the death of his former boss Napoleon. But whoever said it, this anecdote accurately captures the reaction to 2022’s last market curveball — the news that the Bank of Japan had decided to relax its “yield curve control” policy, so that 10-year Japanese government bond yields could now be allowed to reach as high as 50 basis points, rather than 25.