Bank of Japan Governor nominee Kazuo Ueda said monetary easing should continue in support of the economy’s recovery, a comment that suggests he won’t seek an immediate change in policy if he is approved to helm the central bank.
(Bloomberg) — Bank of Japan Governor nominee Kazuo Ueda said monetary easing should continue in support of the economy’s recovery, a comment that suggests he won’t seek an immediate change in policy if he is approved to helm the central bank.
At the second parliamentary hearing in the confirmation process, Ueda said the benefits of the BOJ’s stimulus outweighs its side effects, again reinforcing the view that he isn’t seeking a quick move away from a decade of massive easing.
Still, he acknowledged that some policy shifts had to come as a surprise to avoid speculation, a remark that may support the view of market players betting on change coming sooner rather than later. Some see the side effects from the BOJ’s yield curve control program as increasingly weighing on the functioning of the financial market.
“I think it’s appropriate for monetary easing to be continued,” said Ueda. “In order for policy to be revised, I think there needs to be a major improvement in the price trend.”
Ueda continued to play it safe at the final hearing before a parliamentary vote on his nomination. By pointing out both sides of arguments on topics including the future of monetary policy, Ueda kept his options open for the governorship starting in April.
Any hints over how he would run BOJ policy are sought by global traders and investors amid intense speculation of policy adjustment under his leadership.
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After one of the most aggressive monetary easing programs in modern times, the central bank has become one of the last remaining anchors of low interest rates around the world. Any tweaks to its policy have the potential to jolt financial markets, as happened as recently as December.
Ueda said the challenges faced by the central bank, including its impact on market functioning and its massive asset holdings, present difficulties for whoever takes the helm of the bank. He said he would draw on his academic background and his time as a BOJ board member if selected.
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