–Reports Say Kishida Picks Academic Kazuo Ueda to Succeed Kuroda
By Max Sato
(MaceNews) – Japanese Prime Minister Fumio Kishida appears to have picked an academic candidate with some policymaking experience to replace retiring Bank of Japan Governor Haruhiko Kuroda in a surprise choice that could prompt a gradual departure from the decade-old reflationary Abenomics policy mix without giving too much shock to financial markets and borrowers.
The government will nominate economics professor Kazuo Ueda, 71, as BOJ governor, plus candidates for the two deputy governors at a meeting of directors from the lower house steering committee on Tuesday, news reports said. The government will formally appoint the new BOJ leadership after it wins approval from both chambers of parliament.
Kishida has also decided to nominate Shinichi Uchida, one of the six BOJ executive directors supporting the governor, and Ryozo Himino, a former Ministry of Finance official, reports said. Uchida, 60, is a career central banker with years of experience in crafting unorthodox monetary easing tools. Himino, 62, served as the commissioner of the government watchdog Financial Services Agency from 2020 to 2021.
Kuroda is set to retire on April 8 after a second five-year term and the terms of his two deputies end on March 19.
Ueda served on the BOJ’s nine-member policy board from 1998 until 2005 under the revised Bank of Japan Act that called for more transparency in the decision-making process and independence from political influence. During that period, the bank conducted zero interest policy and its first quantitative easing to support economy recovery after the Asian financial crisis and the collapse of some domestic lenders and brokers.
Ueda declined comment on his reported nomination but told reporters on Friday, “Monetary policy must be conducted based on the current economic and price conditions and projections. From that viewpoint, I think the current Bank of Japan policy is appropriate. I think it is necessary to continue monetary easing under the current circumstances.”
His comments left the impression that there will be no drastic shift in the bank’s policy stance.
Ueda would be the first academic to lead the BOJ’s policy board in the bank’s modern history. For decades, the top position has been held by either former senior Ministry of Finance officials like Kuroda, 78, or career central bankers like Masaaki Shirakawa, who was in office from 2008 until 2013.
Reports on Kishida’s informal pick of Ueda came as a surprise. Market participants and economists believed the top candidates would be both career central bankers: Masayoshi Amamiya and Hiroshi Nakaso.
Amamiya, 67, has been deputy BOJ governor since March 2018. He has been directly involved in monetary policy planning, helping prepare what were previously considered unconventional monetary easing tools including the 2013 launch of quantitative and qualitative easing, and the current yield curve control framework that was adopted in 2016.
Nakaso, 69, served as deputy governor at the bank from 2013 to 2018 during Kuroda’s first term. Nakaso is specialized in financial system stability and international finance. He is currently chairman of Daiwa Institute of Research.
If Kishida had picked Amamiya to replace Kuroda, it would have sent a message that there would be continuity in monetary policy and an eventual exit from the current super-easy policy stance would be smooth, but it could also mean that the prime minister is appointing one of the people who are responsible for conducting aggressive easing that has failed to lift near-zero inflation to stable 2%.
Kishida has been careful about mentioning whether the government and the BOJ should review their 2013 policy coordination accord. The then prime minister Shinzo Abe demanded that the central bank adopt a clear 2% inflation target, instead of trying to achieve a stable 1% price increase in the long term.
Since taking office in 2021, Kishida has been seeking to guide a “shift from policies based on neoliberalism,” referring to market-oriented reforms that have been criticized for creating income inequality, under his “new capitalism” to be introduced in a “medium- to long-term” approach.
Kishida inherited the policy tool boxes prepared by his predecessor Yoshihide Suga, who only served for about a year, and mainly from Abe, who led the conservative Liberal Democratic Party back to power in late 2012 by pledging to “revitalize” the Japanese economy with aggressive monetary easing, flexible fiscal spending and growth strategies.
Massive cash injections into the financial system by the BOJ, which were launched in April 2013, initially lifted inflation toward the bank’s 2% inflation target but the long-lasting drag from the sales tax hike to 8% from 5% in April 2014 and the dampening impact of a crude oil price plunge in 2015 depressed prices again.