Japanese Prime Minister Fumio Kishida plans to nominate economist Kazuo Ueda as the next governor of the Bank of Japan (BoJ), several Japanese media reported on Friday without citing sources, a surprise that briefly sent the yen jumping.
Aged 71, Mr. Ueda, an academic and former member of the BoJ’s monetary policy council (1998-2005), was by no means among the favorites so far to succeed Haruhiko Kuroda, whose second and final term ends April 8.
The government is expected to announce its decision to parliament next Tuesday, according to local media. A parliamentary green light is hardly in doubt given the large majority available to the ruling coalition in both chambers.
The stunt sent the yen jumping against the dollar, which briefly dipped below 130 yen as it was trading for over 131.50 yen before the Ueda stories were published.
But the greenback then recovered somewhat and was worth 130.94 yen around 09:40 GMT.
According to the economic daily Nikkei, the Japanese government previously wanted to offer the post to the current deputy governor of the BoJ, Masayoshi Amamiya, but the latter firmly refused.
The prospect of seeing Mr. Amamiya as head of the BoJ had driven the yen down this week. Because he is considered a fervent defender of maintaining the institution’s ultra-accommodative monetary policy, in line with that of the current governor Haruhiko Kuroda and contrary to the monetary tightening carried out in the United States and Europe.
In office since 2013, Mr. Kuroda has deployed unconventional tools and dizzying asset purchase programs in the hope of beating the deflation that has plagued Japan since the 1990s and boosting its growth.
Since last year, inflation in the country has greatly exceeded the BoJ’s target of 2%.
But despite the fall of the yen and intense speculative pressure to force it to change course, the monetary institution is sticking to its guns for the time being.
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Because the BoJ continues to estimate that inflation should fall in Japan this year, having been caused by external factors such as soaring energy prices and not being maintained by sufficient wage increases and growth. .
According to analysts, the next governor of the BoJ should however have the difficult task of gradually normalizing its monetary policy, while avoiding a derailment of the Japanese economy and financial system, which would have global repercussions.
Mr. Ueda seems to have the right profile to move cautiously on this minefield: in a column published by the Nikkei last July, he advocated avoiding a hasty monetary tightening.
He was also a member of the Bank of Japan when it first introduced a zero interest rate policy in 1999, and voted against lifting the measure the following year.
He holds a doctorate in economics from the prestigious Massachusetts Institute of Technology (MIT) in Boston and has essentially had an academic career.