by Takaya Yamaguchi and Kentaro Sugiyama
TOKYO (Reuters) – Japan’s government is expected to appoint Kazuo Ueda, an academic and former member of the central bank’s board of governors, as the next governor of the Bank of Japan (BoJ), government sources learned Reuters on Friday. raises the yen.
This surprise choice, initially reported by the economic daily Nikkei, is considered by the financial markets as an important step towards a change in the monetary policy of the Bank of Japan, whose ultra-accommodating strategy runs counter to that of the main major central banks around the world.
Kazuo Ueda, an academic at Kyoritsu Women’s University, a private women’s institution, is considered an expert in monetary policy and played an important role in the fight against deflation in Japan, in its initial phase, with the implementation of quantitative easing (QE) and “forward guidance” (the future evolution of monetary policy) for the financial markets.
Investors have been desperately trying for months to push Japanese bond yields higher, anticipating an exit from the BoJ’s ultra-accommodative policy in favor of the appointment of a new governor at the head of the Japanese central bank, the mandate of its current boss, Haruhiko Kuroda, ending in April.
According to the sources and the Nikkei daily, the Japanese government will also appoint Ryozo Himino, former head of the Financial Services Agency (FSA), and Shinichi Uchida, a BoJ executive, as deputy central bank governors.
PRESENTATION TO PARLIAMENT TUESDAY
These probable candidacies, which will be presented to Parliament on February 14, must be ratified by both chambers, where the ruling party has a large majority.
While Japanese inflation reached 4% in December, double the BoJ’s 2% target, Haruhiko Kuroda still considers it premature to say that price increases will be sustainable.
In the markets, the yen strengthened from around 131.55 yen per dollar to around 130.60 after the release of the Nikkei information.
The yield on ten-year Japanese government bonds rose to 0.50%, the fluctuation limit tolerated by the BoJ.
“Ueda is well versed in interest rates. And he also has experience in communicating the BoJ’s zero interest rate policy when he was a member of the board of governors,” said Shotaro Kugo, economist at the Daiwa Institute of Research.
“Being both a theorist and a practitioner would put him in a good position to move forward as the BoJ enters a difficult period of (policy) normalization,” he added.
In a July opinion piece on the Nikkei, Kazuo Ueda said he warned the BoJ against raising interest rates prematurely just because inflation had briefly topped 2%.
But he also said the BoJ should consider an exit strategy from ultra-loose monetary policy and revise its sizeable stimulus program at some point.
“I think the new team means that the BoJ’s monetary policy will be redefined (and) will not be the current one,” said Takayuki Miyajima, economist at Sony Financial Group.
THE PRIME MINISTER DOES NOT CONFIRM NOR DENY
Kazuo Ueda served on the BoJ’s board of governors from 1998 to 2005. He voted against raising interest rates from zero to 0.25% in August 2000, arguing that the bank could wait a little longer given of contained inflation. The central bank subsequently reversed its decision and lowered its rates again.
Prior to Friday’s news, the Nikkei reported last week that the Japanese government had canvassed BoJ Deputy Governor Masayoshi Amamiya to succeed Haruhiko Kuroda as central bank chief, but Kuroda reportedly declined the offer. , according to the economic daily.
Asked, the Japanese Prime Minister, Fumio Kishida, did not wish to answer on the probable appointment of Kazuo Ueda at the head of the BoJ.
“We are making arrangements to present the BoJ governor and deputy governor candidates to parliament on February 14,” he told reporters as he left his offices in Tokyo.
(Tokyo office report, with Akriti Sharma in Bangalore; written by Leika Kihara, French version Claude Chendjou, edited by Blandine Hénault and Kate Entringer)
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