Bank of Japan must couple easing with unwinding vision, says former official

Bloomberg

The Bank of Japan (BOJ) needs a vision for eventually unwinding its massive asset purchases if it eases policy further, according to a former BOJ official.
“It’s becoming important for the BOJ to not simply say it is strengthening stimulus but to plot the course of events, to tell the story of how these steps will lead to normalisation,” said Takashi Kozu, who held a wide range of positions at the central bank and was a member of the Basel Committee on Banking Supervision from 2006 to 2010.
Simply pledging to strengthen stimulus is no longer enough to convince investors its price target will be met, according to Kozu, who was speaking amid concern that waning inflation could prompt the BOJ to increase stimulus, even as the side effects of policy mount. The central bank has failed to achieve its 2 percent goal after six years of aggressive purchases of Japanese government bonds and exchange-traded funds, which is fueling skepticism about its effectiveness.
“The BOJ must paint a picture that includes an image of an exit,” Kozu, who is now president of the Ricoh Institute of Sustainability and Business in Tokyo, said in an interview on April 11.