Ueda Nominated to Lead BoJ – Will Policy Shift Follow?
By On Friday, the Japanese Government announced the surprise nomination of Kazuo Ueda to become the next governor of the Bank of Japan (BoJ), replacing incumbent Haruhiko Kuroda.[0] Ueda is an academic and former Bank of Japan policy board member, who currently teaches economics at the Kyoritsu Women's University.[1] He is seen as an authority on monetary policy and his appointment has sparked speculation of a shift away from the BoJ's ultra-loose monetary policy.[2]
Before Prime Minister Fumio Kishida's government can officially name Ueda for a five-year term, his nomination must be ratified by both houses of parliament, which are both presently managed by the ruling coalition.[3] Shinichi Uchida, the BOJ’s executive director in charge of monetary policy, and Ryozo Himino, former head of Japan’s financial watchdog, have also been nominated for deputy governor positions.[2]
Ueda has maintained that the BoJ's current monetary policy is “appropriate” and that monetary easing should continue for now, however financial markets are on alert against any hints of policy change once he takes the helm in April.[4] The most recent Tuesday figures revealed that Japan's economy experienced an annualized 0.6% growth in the fourth quarter of 2022, after having contracted by 0.8% in the preceding quarter.[5]
Ueda holds a Ph.D. from MIT and has maintained a close relationship with the BoJ as a professor even after he left the bank.[6] He has moderated various BoJ conferences including one in November last year about the wage-growth mechanism. Ueda is viewed as a potential major-league rebel, as he voted “No” when the BoJ lifted its benchmark rate in August 2000.[4]
Investors will be looking to Ueda for signs of a transition from the current accommodative monetary policy that has formed a key pillar of “Abenomics”, the economy-boosting program pushed by late Prime Minister Shinzo Abe. As Ueda takes over from Kuroda, he must deal with both slow economic growth and the highest inflation since 1981.[5] His comments in parliament will be scrutinized for any signs of a transition from the current policy path.
0. “Bank Of Japan's Next $5 Trillion Man Has Worst Job In Economics” Forbes, 14 Feb. 2023, https://www.forbes.com/sites/williampesek/2023/02/14/bank-of-japans-next-5-trillion-man-has-worst-job-in-economics
1. “Gov't Nominates Academic Kazuo Ueda as Next BOJ Governor” Financial Tribune, 15 Feb. 2023, https://financialtribune.com/articles/international/117120/govt-nominates-academic-kazuo-ueda-as-next-boj-governor
2. “Who is Kazuo Ueda? Yen spikes on report economist to head Bank of Japan.” MarketWatch, 10 Feb. 2023, https://www.marketwatch.com/story/japanese-yen-climbs-on-reports-that-economist-will-become-next-boj-head-322c47d6
3. “Japan nominates new central bank leader in possible move away from ultra-easy policy” erienewsnow.com, 14 Feb. 2023, https://www.erienewsnow.com/story/48377825/japan-nominates-new-central-bank-leader-in-possible-move-away-from-ultra-easy-policy
4. “New Bank of Japan governor has to tread a fine line” WSWS, 16 Feb. 2023, https://www.wsws.org/en/articles/2023/02/16/aguk-f16.html
5. “Can the next Bank of Japan boss fix the country’s economy?” BBC, 14 Feb. 2023, https://www.bbc.com/news/business-64621278
6. “Kishida to Pick Ueda for BOJ in Shock as Amamiya Turns Job Down” msnNOW, 10 Feb. 2023, https://www.msn.com/en-us/money/markets/kishida-to-pick-ueda-for-boj-in-shock-as-amamiya-turns-job-down/ar-AA17jXAI
