The Bank of Japan (BoJ) has been excessively slow in raising its policy interest rates, now at 0.75%. This cautious approach has put the institution on the brink of a crisis, as it faces unexpected challenges such as rising oil prices and a depreciating yen. The original aim of normalizing its monetary policy involves raising interest rates to appropriate levels while reducing its significant holdings of government bonds and exchange-traded funds, but delays in action leave it in a precarious situation.

As inflation pressures mount, experts argue that interest rates should be raised to at least 1.5% to 2% to align with current economic conditions and that the BoJ must consider significantly reducing its portfolio of government bonds, which currently stands at approximately ¥546 trillion. Drawing comparisons to a human body, the bank's current state is likened to an unhealthy condition requiring urgent reform. The notion is that a "slimmed down" BoJ, through proper monetary policy, would facilitate a healthier economic environment capable of resisting external shocks such as pandemics.

Kazuo Ueda, who became the BoJ governor three years ago with the mission of rejuvenating the bank, has had time and opportunities to implement these necessary reforms. However, the persistently delayed rate hikes have led to wasted opportunities that could have fortified the bank's stance against economic adversities, signaling the urgent need for decisive action to restore confidence in Japan's monetary policy.