Bloomberg
The Bank of Japan's inaction on Thursday drove the yen higher, making exports less competitive, and pushed share prices lower, making the prospects for a recovery of Japanese growth even dimmer, said Bloomberg View columnist Mohamed El-Erian . "Pity the Bank of Japan," El-Erian said. "The Bank of Japan has come closest to the line that separates effective policy measures from ineffective, if not counterproductive ones." The BoJ's attempts at unconventional monetary policy earlier this year produced counterintuitive results, including an appreciation of the yen. So it was understandable that the BoJ held off further policy activism this week, but it finds itself in a Catch-22 of contributing to anti-growth asset-price movements seemingly regardless of what it does or doesn’t do, El-Erian said. "Such a policy outcome is rare in advanced economies, where policy credibility and institutional robustness are taken as givens," he said. Other central banks should monitor the BoJ's predicament.
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