Japan’s parliament on Friday approved the appointment of economics professor Kazuo Ueda to head the Bank of Japan (BoJ) from next month, where he will have to manage the difficult legacy of ultra-loose XXL policy.
After the lower house of the Dite on Thursday, it was the upper house which voted on Friday to appoint Mr. Ueda, 71, as governor of the BoJ, for a five-year term.
There was no suspense given the overwhelming majority of the ruling coalition in both assemblies. Prime Minister Fumio Kishida’s government selected Mr Ueda last month.
The BoJ is due to make its final monetary policy decision on Friday under its current governor Haruhiko Kuroda, who, 78, is about to leave the scene after 10 years of monetary policy in bazooka mode in an attempt to stimulate growth and inflation in the country. Japan, with a very mixed record.
A status quo is expected Friday by a very large majority of observers, but a final surprise is not completely excluded, as Mr. Kuroda has sometimes shown himself to be unpredictable in the past.
Most of the other major central banks, starting with the US Federal Reserve (Fed), have tightened credit conditions sharply since last year in the face of high inflation in their respective countries.
Against the current, the BoJ maintained its ultra-accommodating monetary policy, emphasizing that high inflation should not last in Japan, for lack of wage increases and insufficient growth to maintain it.
This, however, has had the effect of sending the yen falling against the dollar for the past year, and the BoJ has increased its purchases of Japanese government bonds (JGBs) from record highs in recent months to combat intense speculative pressure aimed at forcing it change its course.
During his hearings before Parliament at the end of February, Mr. Ueda made a point of monetary continuity, judging that the BoJ’s policy was appropriate for the time being.
However, he also underlined the perverse effects of this policy, which bodes well for future developments.