MNI POLICY: Ueda Supports BOJ's Easy Policy, Could Tweak YCC

The likely next governor of the Bank of Japan Kazuo Ueda is likely to support continued ultra-low rates as he studies the economy and price conditions, but could consider measures to restore the functioning of financial markets via tweaks to yield curve control policy, MNI understands.

Following a Nikkei report that the government plans to nominate the economist and former member of the BOJ’s Policy Board as the central bank's next governor after Haruhiko Kuroda steps down, Japanese TV reported comments from Ueda supporting the BOJ’s easy policy.

The government will also nominate Shinichi Uchida, the BOJ’s current executive director, and Ryozo Himino, former chief of the Financial Services Agency, to deputy governor posts, Nikkei reported.

Ueda has previously expressed support for easy policy and opposed lifting rates from zero percent in 2000 under then-governor Masaru Hayami. Ueda became the BOJ policy board’s youngest member in April 1998, and was later reappointed before serving until April 2005.

Ueda was well known at the time for arguing in favour of forward guidance for the policy rate before it was introduced in 2000, with a pledge to hold at zero until fears of deflation had dissipated.

ORTHODOX

“Mr Ueda is an orthodox macroeconomist and is well-acquainted with monetary policy. His understanding and knowledge are a top-class at home and abroad,” a former BOJ official said.

Another former BOJ official said that Ueda regards monitoring the real economy and prices as more important than economic theory.

The government will present nominees for Bank of Japan governor and two deputy governors around 1100 JST (0200 GMT) on Tuesday, media reported.

The chairmen of the governing coalition’s Diet Affairs Committee and the opposition’s Diet Committee are considering conducting Lower House hearings for BOJ nominees on Feb 24.