Economics professor Kazuo Ueda, who holds a PhD from the Massachusetts Institute of Technology, has been nominated as the Bank of Japan’s next governor by Prime Minister Fumio Kishida. The lawmakers will, as a result, have to approve the appointment.
Ueda, a respected economist described as careful and cautious, was a surprise pick after the outgoing governor’s deputy reportedly turned down the job. He will be tasked with navigating a way forward after a decade of extraordinary monetary easing.
Ueda faces several challenges in the job and would be under pressure to join international peers in tightening the bank’s decade-old monetary policy.
Japan has been facing an economic crisis with data released Tuesday morning showing that the GDP expanded just 0.2 per cent in the last quarter of 2022. The country had been hoping for a better growth after the long-awaited reopening of the country to tourists.
Ueda had earlier been a BoJ policy board member and is taking over from governor Haruhiko Kuroda, the central bank’s longest-serving leader.
Kuroda has been responsible for the country’s ultra-loose policies. He took hold of the reins in 2013 and his efforts to boost Japan’s economy include a negative interest rate and spending vast sums on government bonds.
In the past year, he has held firm, even as other central banks hiked rates to tackle inflation, with the resulting policy gap causing the yen to slump against the dollar. The 78-year-old is due to step down on April 8 when his second term ends.
The yen fell from around 115 against the dollar in February 2022 to a three-decade low of 151 yen in October. The Japanese currency has since recovered to about 132 against the dollar. When reports emerged that Ueda would be nominated instead of Kuroda’s deputy Masayoshi Amamiya, the yen even briefly strengthened.
Amamiya was being seen as a continuity candidate likely to keep the BoJ’s stimulus policies. But that does not mean Ueda should be viewed as a hawk, analysts said.
“The current BoJ policy is appropriate, and I think it’s important to maintain monetary easing policy for now,”
He leaves Ueda, 71, the challenge of working out the bank’s next steps, Saori N. Katada, an international relations professor at the University of Southern California, told AFP.
Inflation hit a multi-decade high of four per cent in Japan in December, above the BoJ’s longstanding two-percent target, fuelled partly by soaring energy bills.
(With inputs from agencies)
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