Japan’s parliament gave a green light for veteran economics professor Kazuo Ueda to take the helm of the Bank of Japan next month in the first change of governor in a decade.
(Bloomberg) — Japan’s parliament gave a green light for veteran economics professor Kazuo Ueda to take the helm of the Bank of Japan next month in the first change of governor in a decade.
The upper house voted for Ueda to become the first professor to lead the central bank Friday just hours before outgoing Governor Haruhiko Kuroda ends his final policy meeting. The lower house voted in favor of Ueda on Thursday.
Approval for Prime Minister Fumio Kishida’s nominations for the governor and deputy governor positions was widely expected with his ruling coalition holding majorities in both houses.
Kishida is gradually reshaping BOJ’s nine-member board to put it on a more neutral footing. None of his five appointees so far is a strong monetary easing advocate as Kishida reverses a trend started by former premier Shinzo Abe.
Under Abe, the board was packed with supporters of policies to reflate Japan’s economy. Abe also handpicked Kuroda to lead the massive monetary stimulus that became a key pillar of his growth strategy known as Abenomics.
At parliamentary hearings for confirmation last month, Ueda, 71, avoided tying his hands to any specific policy. He said that his most important task is to deploy the right policy at the right time whether it is for normalization or continued stimulus. He didn’t hint at any intention to quickly shift policy.
Traders are closely watching if Kuroda will surprise markets one last time at Friday’s meeting to help prepare the ground for Ueda.
While almost all of economists surveyed expect no policy change, Goldman Sachs and BNP Paribas are among those warning of the risk of a change in the BOJ’s yield curve control program. In December, the central bank unexpectedly tweaked its program in a move that jolted global financial markets.
Assuming the central bank stands pat, once Kuroda’s final post-decision press briefing finishes attention will turn to Ueda and how he will handle policy.
The key focus for BOJ watchers will be Ueda’s stance on the increasing signs of side effects in a bond market dominated by the central bank. Japan’s yield curve remains distorted and a BOJ bond market survey last week showed its functioning has deteriorated to its worst on record.
In Friday’s parliamentary vote, the upper house also approved Shinichi Uchida, one of Kuroda’s key policy architects, and former Financial Services Agency chief Ryozo Himino to assume their roles as deputy governors from March 20.
After taking the helm on April 9, Ueda will hold his first policy meeting from April 27-28.
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