The Japanese government is reportedly set to appoint Kazuo Ueda as the next governor of the Bank of Japan (BOJ), a move that may surprise the financial world. Ueda, a former BOJ policy board member and academic at Kyoritsu Women’s University, is a renowned expert on monetary policy, but was not considered a leading contender for the role. He played a critical role in combating the early stages of Japan’s deflation crisis through the implementation of massive asset purchases and guidance for financial markets.
Upon the announcement of Ueda’s potential appointment, the yen and bond yields briefly rose, leading to speculation that the 71-year-old might bring an end to the country’s super-low interest rates sooner than expected. However, in a streamed online statement, Ueda emphasised that it was appropriate for the BOJ to maintain its current ultra-easy policy stance and noted that no decision has been made regarding his appointment.
Investors have been trying to push up Japanese government bond yields in recent months on the expectation that the BOJ will eventually phase out its massive stimulus program. Ueda is described as a pragmatist with a balanced approach, respected within the central bank, who is unlikely to make any abrupt moves towards policy normalisation, but will also not ignore the side effects of the BOJ’s policies.
In addition to Ueda’s appointment, the government is expected to nominate Ryozo Himino, former head of Japan’s banking watchdog, and BOJ executive Shinichi Uchida as deputy governors. Analysts predict that Uchida, a career central banker, will assist Ueda in managing the bank’s bond yield curve control policy, while Himino, who is fluent in English, will primarily handle international affairs.
The government is expected to present the nominees to parliament on February 14th, and the appointments, if confirmed, will mark a shift in the direction of monetary policy, as Ueda will be the first academic to hold the top position at the BOJ.
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