The Japanese government is likely to appoint Kazuo Ueda, an academic and a former member of the Bank of Japan’s (BOJ) policy board, as the central bank’s next governor, the Nikkei newspaper reported yesterday.
Here are reactions to the report:
“The key thing for me is that [BOJ Deputy Governor Masayoshi] Amamiya appears to have turned down the offer to have been made governor of the Bank of Japan. He has been at the BOJ a long time and was considered a key supporter of [BOJ Governor Haruhiko] Kuroda and his policies, that is very loose monetary policy and a weak JPY [yen]. So with him gone, the reaction we are seeing is probably one of relief that the current weak-JPY policy may be coming to an end,” said Stuart Cole, head macro economist at Equiti Capital in the UK.
Photo: REUTERS
“However, the apparent choice for governor now — Ueda — is somewhat of a wild card for the markets. He has been a policymaker at the BOJ in past, from 1998 to 2005, but what his views are on the current monetary policy stance are mostly unknown. So we could yet be in for a volatile ride in the JPY if he turns out to be singing from the same hymn sheet as Kuroda,” he said.
Jane Foley, head of foreign exchange strategy at Rabobank in London, said there are “various papers published by him” on the BOJ Web site since 2005, “but they’re quite few and far between, and I think he was not top of the list.”
“What I would imagine, is that because he has been on board of the Bank of Japan, that he is relatively dovish, because just about everyone that’s been on the board of the Bank of Japan has been dovish for a long time. Right now, to be honest, we can only assume that. We need some commentary from him,” she said. “I have been of the view for a while that probably — whoever takes over as the governor — there may not be any huge initial change in so far as everyone is trying to nurture inflation into place, everyone is waiting for the spring wage talks and the initial indications are a little bit positive, but perhaps not enough for a huge turnaround.”
“Even if Kuroda remained in control, we could get an adjustment in yield-curve control this year anyway,” Foley added.
Hiroaki Muto, an economist at Sumitomo Life Insurance Co in Tokyo, said that “Ueda seems a very different type from Kuroda, in terms of being an academic who would plainly conduct policy based on actual economic fundamentals and value conversations with the market.”
“He may not be super hawkish type either, so the upcoming [normalization] would take place very slowly, no matter how the new leadership revises the joint statement” with the government, Muto said.
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