POLL-Kazuo Ueda for BOJ governor is good choice, all economists say

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By Kantaro Komiya

TOKYO, Feb 24 (Reuters) – Economists polled by Reuters unanimously support the nomination of academic Kazuo Ueda as next Bank of Japan governor, link shortener citing his track record as a monetary policy theorist, central bank board member and a good communicator, a survey showed on Friday.

Prime Minister Fumio Kishida’s government presented Ueda to parliament last week, a surprise pick that could raise the chance of an end to the BOJ’s yield curve control (YCC) policy after its creator Haruhiko Kuroda’s 10-year reign ends in April.

Two-thirds of BOJ watchers also expect the central bank to start unwinding its ultra-loose policy either in April or June.Still, a majority said Japan’s negative interest rate policy was likely to stay at least until the second half of 2024.

In the Feb. 14-21 monthly Reuters poll, all 26 respondents said Ueda, the former University of Tokyo economics dean, was a good choice for the top job at the BOJ.

Ueda “has extensive knowledge as well as experience on monetary policy, so he would make pragmatic decisions,” said Nobuyasu Atago, chief economist at Ichiyoshi Securities.

Besides his scholarly works, analysts mentioned Ueda’s stint as a BOJ board member from 1998 to 2005 at the time of Japan’s financial crisis and deflation as evidence of his suitability for the role.

Analysts said Ueda would be more flexible in conducting policy than those directly involved in the BOJ’s recent dovish measures, such as deputy governor Masayoshi Amamiya, who had been seen as the top contender to succeed Kuroda.

Takashi Shiono, head of Japan economics at Credit Suisse, said Ueda would be suited to review Kuroda-era stimulus from an independent perspective because “he is an expert who is characterised neither a hawk or dove”.

Respondents also counted on Ueda’s communication skills fostered through college lectures as he attempts to manage a smooth policy transition amid volatile market conditions.

Two-thirds of economists expect the BOJ to start unwinding its ultra-easy policy within the next four months.Of 27 respondents, seven said that would happen at the April rate-review, Ueda’s first. Another 11 said June. Three projected for July, two for October, three for first half of 2024 and the remaining one for “second half of 2024 or later”.

The most likely first step would be revising forward guidance, chosen by 13 in a question allowing multiple answers.Nine expected the removal of the 10-year yield target, effectively ending the YCC scheme in place since 2016.

Eight each said the BOJ would widen the 10-year cap range again after doubling it to plus-minus 0.5% in December, or targeting a shorter-term yield, a measure the International Monetary Fund proposed last month.

Only five of 27 respondents said the BOJ would end its negative interest rate policy by the end of this year.Another five expected it to happen in first half of 2024. Seven said the latter half of 2024 and 10 opted for 2025 or later.


Economists were divided on whether the 2013 “joint statement” between the government and BOJ should be revised in the post-Kuroda era, with 13 of 25 respondents saying changes were needed.

The current statement, which mandates Japanese policymakers to fight deflation and achieve a 2% inflation target at the earliest date, “limits monetary policy options and must be revised to allow flexible measures”, said Takeshi Minami, chief economist at Norinchukin Research Institute.

Other analysts said revisions could damage the BOJ’s credibility and the joint statement was better left unchanged to anchor inflation expectations to 2%.

In a follow-up question accepting multiple answers, 13 respondents said the 2% target can be redefined as a long-term goal.Seven called for a more flexible price target such as a range centred around 2%. Another seven said the government’s fiscal consolidation efforts must be codified.

Economists slightly downgraded their Japan growth forecasts for fiscal years 2022 and 2023.But they raised them for the first two quarters this year after news of weaker-than-expected growth in October-December on anaemic business spending.

Japan’s core consumer inflation is forecast to stay above the BOJ’s 2% target until July-September, longer than in the January poll.

(Click here for other stories from the Reuters global economic poll) (Reporting by Kantaro Komiya; Polling by Veronica Khongwir and Anant Chandak; Editing by Lincoln Feast)

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