Kuroda tested by divided board

The newly-appointed Governor of the Bank of Japan, Haruhiko Kuroda, is struggling to build a consensus ahead of his first central bank board meeting on April 3-4, adding to concerns that markets may be disappointed as they expect hefty bond purchases and a radical shift in its policymaking framework. Kuroda now has only three definite allies for introducing bold measures, and a struggle to secure consensus could force the BoJ to do the only incremental change in the policy and refrain from signaling stronger measures to come. In case of a disappointment, the Japanese Yen may rebound, adding more pressure to the Bank of Japan and Haruhiko Kuroda in particular, to achieve its ambitious 2% inflation target within two years. 

"The BOJ doesn't necessarily have to decide on everything this week. Trying to do so could expose to markets the rift within the board," said Yasunari Ueno, chief market economist at Mizuho Securities in Tokyo. "In any case, there's simply not enough time to discuss so many factors that come into play. The key is how Kuroda manages to sustain market expectations."

"The best outcome for Kuroda would be agreement on every measure, but it's unlikely," said Hiromichi Shirakawa, chief Japan economist at Credit Suisse in Tokyo and a former BOJ official.