Next week, Japan’s central bank will formally review its monetary-policy strategy for the first time since 2016. Relatively little is expected from that review. Worse still, relatively little is expected of Japan.

Even those skeptical of the oft-repeated talking point that central banks have exhausted their ammunition must admit that the Bank of Japan is at the very least out of ideas. Japanese bond yields are now marginally higher than they were at the beginning of 2020 across almost every part of the yield curve. Average interest rates on loans are functionally unchanged. Core consumer prices have been declining for six months.

Reducing interest rates any further into negative territory is pretty much a no-go, because of the deleterious effect on the profits of banks, and regional banks in particular. Having reached the end of its rope with conventional monetary policy by the time of the global financial crisis, the BOJ seems to have reached the limits of its own comfort with unconventional policy too.

Virtually no one really believes the central bank has any hope of hitting its target for 2% inflation sustainably any time in the near future.