Shinzo Abe, the slain former Japanese leader, made his biggest mark on Japan’s economy with a single act: The appointment of a central bank governor committed to deploy massive and prolonged stimulus. That forceful campaign to buttress growth and crank up inflation may be approaching its sell-by date.
For all the salutes to Abenomics — a mix of monetary, fiscal and regulatory reforms aimed at ending years of perceived decline — only the first of those components had real staying power. By tapping Haruhiko Kuroda to lead the Bank of Japan, a position somewhat insulated from the daily cut-and-thrust of politics, Abe ensured the printing presses would run hot after he stepped down as prime minister in 2020. But such aggressive easing does have a sunset clause, given the march toward higher interest rates in almost every other economy and the long-awaited attainment of 2% inflation in Japan.