Ueda BOJ Governor Nominee: "Current Monetary Policy Appropriate... Continued Monetary Easing"

Kazuo Ueda, Nominee for Governor of the Bank of Japan. [Image source=Yonhap News]

[Asia Economy Reporter Lee Ji-eun] Kazuo Ueda, the nominee for Governor of the Bank of Japan (BOJ), stated on the 24th that "the monetary policy implemented by the Bank of Japan is appropriate" and expressed his intention to continue the accommodative monetary policy. This is interpreted as a confirmation of his intention to maintain the monetary easing policy pursued by current BOJ Governor Haruhiko Kuroda for the past 10 years for the time being.

At a hearing held by the House of Representatives (Upper House) Steering Committee on the same day, nominee Ueda said, "We will continue monetary easing to create conditions where companies can raise wages."

Regarding the target for the consumer price inflation rate, which is currently in the 4% range, being lowered to 2%, he explained, "It will take time to achieve this continuously and stably." The consumer price index for January, announced by Japan's Ministry of Internal Affairs and Communications on the same day, rose 4.2% year-on-year.

This is the first time nominee Ueda has publicly expressed his stance on Japan's future monetary policy. The Japanese government submitted a personnel proposal to the National Diet on the 14th to appoint Ueda, a macroeconomics expert, as the successor to Governor Haruhiko Kuroda, who will retire on April 8. Nominee Ueda's remarks are seen as indicating his intention to maintain the large-scale monetary policy promoted by Governor Kuroda for the time being.

However, the market is betting on the expectation that if he assumes the governor position, Japan's monetary policy will shift to a tighter stance compared to before. This is because he is evaluated inside and outside the financial sector as a pragmatist who responds flexibly according to market conditions.

Governor Ueda has shown caution against the 'monetary policy omnipotence theory,' which assumes that monetary policy can solve all market problems. He also emphasized that there are limits to recovering the economy solely through monetary policy that injects money under negative interest rates, and that raising the potential growth rate should precede this. Accordingly, investors expect nominee Ueda to soon begin revising the YCC (Yield Curve Control) policy, which involves unlimited purchases of government bonds to control long-term interest rates.

However, since he has expressed his intention to continue quantitative easing, the prevailing view is that the degree of tightening will not go beyond abolishing the YCC policy to the level of raising interest rates.

Nominee Ueda emphasized, "I want to complete the mission of achieving price stability, which has been a challenge for many years, within five years," and added, "I want to create a situation where wages structurally rise and realize price stability in a continuous and stable manner."

This content was produced with the assistance of AI translation services.