Sound of Kuroda's silence on Bank of Japan rate cut echoes across markets

Haruhiko Kuroda hasn’t lost his power to jolt markets: but now he’s moving them by doing nothing. The yen soared the most in eight months and stocks sank in Tokyo on Thursday as the Bank of Japan Governor held off from adding to the central bank’s bond-buying programme or its budget for exchange-traded equity funds.

The move confounded economists, a slight majority of whom had expected extra easing, and investors, who’d pushed the Topix index higher and the yen toward a one-month low in the hours before the decision.

“I’m very disappointed. I wanted the BOJ to do something and the BOJ should have done something,” said Masaru Hamasaki, head of the investment information department at Amundi Japan. “Kuroda has created mostly positive surprises so far, but this time it’s negative. The BOJ hasn’t been on the same wavelength as markets this year.” Of course, Kuroda’s inaction doesn’t just matter to investors.

Japan’s economy is struggling to break out of a funk, with consumer prices dropping in March by the most since 2013 and company profits getting hurt by the stronger yen. In refraining from adding to stimulus, officials are betting that their success in bringing down borrowing costs since unveiling a negative-rate policy in January will generate an acceleration in lending.