The death of Shinzo Abe, namesake of Japan’s “Abenomics” policy, makes any immediate challenge to his legacy highly unlikely but could eventually allow Prime Minister Fumio Kishida to phase out Abe’s government spending and monetary stimulus.
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But ultimately his absence and the LDP’s victory in Sunday’s election, helped by an Abe sympathy vote, could give Mr. Kishida political capital to change policy course. “In the long run, however, the Bank of Japan must consider some form of tweak to its monetary policy given problems such as the weak yen,” he said. “That will mean former or incumbent BOJ executives will remain strong candidates as next central bank governor.”
The BOJ’s massive stimulus, driven by Governor Haruhiko Kuroda, helped reverse a relentless yen rise that hurt Japan’s exporters, boost stock prices, and improve business sentiment. Economists, however, criticized a lack of a credible growth strategy and reforms to help the economy shift sustainably into higher gear.
Eventually, Mr. Kishida may seek to dial back some of the radical monetary experiment put in place by Mr. Kuroda, which has strained financial institutions’ profits and crippled pricing in the bond market.
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