© Reuters. FILE PHOTO: A security officer is seen at the headquarters of Bank of Japan in Tokyo, Japan, January 17, 2023. REUTERS/Issei Kato
TOKYO (Reuters) – Japan’s government is likely to appoint Kazuo Ueda, an academic and a former member of the Bank of Japan’s policy board, as the next central bank governor, two government officials told Reuters on Friday.
The 71-year-old is widely seen as an expert on monetary policy, but is seen as a surprise appointment by analysts. He was not even considered a dark-horse candidate.
The BOJ’s leadership transition this spring marks a historical end to current Governor Haruhiko Kuroda’s radical, decade-long monetary experiment that sought to shock the public out of a deflationary mindset, and could finally see Japan align with other major economies in raising interest rates.
The following are some key questions and answers about the next central bank governor in the world’s third-largest economy and the challenges he faces.
WHAT IS HIS BACKGROUND?
An academic by training, Ueda studied mathematics at the elite University of Tokyo before receiving his Ph.D. in economics at the Massachusetts Institute of Technology in 1980, according to a profile on the University of Tokyo’s website.
He taught at the University of British Columbia in Canada before returning to Japan and eventually the University of Tokyo, where he later became dean of the economics faculty.
He served as a member of the Bank of Japan’s policy board between 1998 and 2005.
WHAT HAS HE BEEN DOING SINCE?
Currently, Ueda is a professor and the dean of the business department at Kyoritsu Women’s University in Tokyo. He is an external director at JGC Holdings Corp, an engineering company and at the state-owned Development Bank of Japan.
He is also the chief councilor of the Institute for Monetary and Economic Studies, the BOJ’s think tank.
WHAT IS HIS STANCE ON THE BOJ’S ULTRA-LOOSE POLICY?
In comments to reporters broadcast on Nippon TV on Friday, Ueda declined to discuss the governor’s job, or whether he had been approached about it.
When asked about his views on monetary policy he said: “Monetary policies must be conducted based on the current state and especially the outlook for the economy and prices. From that perspective, I think the current BOJ policy is appropriate, and anyway, monetary easing must carry on given the current state.”
In an opinion piece in the newspaper last year, Ueda warned the BOJ against prematurely raising interest rates just because inflation exceeded 2%.
But he also said the central bank must consider an exit strategy from ultra-loose monetary policy, and review its extraordinary stimulus programme at some point, according to the piece.
WHAT DO THE MARKETS THINK?
Ueda remains something of an unknown quantity for many in the markets, economists and analysts said. The yen initially gained ground on expectations that he could phase out super-low interest rates earlier than expected, but it later trimmed gains after his comment that current BOJ policy is appropriate.
“In terms of monetary policy, probably nobody has a very good sense of his way of thinking, but he’s very strong in international economics, including foreign-exchange rates,” said Masayuki Kichikawa, the chief macro strategist at Sumitomo Mitsui (NYSE:) Asset Management in Tokyo.
WHAT ABOUT HIS TIES TO ABENOMICS?
Unlike Kuroda, and his deputy, Masayoshi Amamiya, Ueda is not seen as having strong ties to the “Abenomics” policies of massive monetary and fiscal stimulus championed by former Prime Minister Shinzo Abe.
“Ueda is actually an academic economist. Anyone who has studied Japan academically will be aware of him,” said James Malcom, head of FX strategy at UBS in London.
“He’s a little bit of a supply-sider, but he’s also been not terribly positive on Abenomics from the start.”
In a 2016 article, Ueda wrote that the BOJ’s ultra-easy policy seemed to be “reaching its limits”.
