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Japan can trim stimulus without repeating mistakes

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NEW YORK – If Haruhiko Kuroda is starting to lay the groundwork to trim Japan’s huge stimulus, he’ll be looking over his shoulder at two things: the world outside and a deceased predecessor.

The first issue for the Bank of Japan governor to watch is the international scene, which is getting tougher for central banks eyeing steps away from ultra- accommodation.

Kuroda’s speech on Monday in Nagoya that hinted at policy normalization described a benign global growth outlook. It’s as though the weaker data of the past month and market gyrations never happened.

The second challenge is related to the first. One of his forerunners, Masaru Hayami, made a huge mistake in 2000 that Kuroda should learn from. So determined was Hayami to lift borrowing costs from zero and so intent was he to assert the BOJ’s new independence that he hiked into a global cycle that seemed superficially resilient.

In reality, it was just months away........

© The Japan Times