Japan’s PM Kishida picks academic Ueda to helm BOJ, reports say

JAPANESE Prime Minister Fumio Kishida will nominate Kazuo Ueda, a professor and former Bank of Japan (BOJ) board member, to be the next BOJ governor from April, according to local media reports that sparked a rise in the yen.

Masayoshi Amamiya, deputy BOJ governor, refused to take the post, the Nikkei newspaper reported on Friday (Feb 10). Amamiya has been seen as the top contender to take the place by economists. NHK, Yomiuri and Kyodo also reported that Ueda was in line for the nomination.

The yen strengthened to 130.59 against the US dollar after the news from around 131.54, a move that suggests investors initially interpreted the decision as likely a hawkish choice.

“The market was completely taken by surprise.” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities. “Putting aside what kind of policy Ueda will take, the way the government has handled this seems a bit clumsy, having raised expectations that Amamiya will succeed.”

Shinichi Uchida, BOJ’s executive director in charge of monetary policy and Ryozo Himino, former head of Japan’s financial watchdog were picked for the two deputy governor positions, according to the Nikkei.

The new deputies will assume their roles from Mar 20 once approved by parliament.

Ueda, 71, a professor at Kyoritsu Women’s University, was a BOJ board member from 1998-2005 when the central bank introduce a zero interest rate policy for the first time and embarked on quantitative easing.

Ueda is known for voting against the pulling away from the zero rate in August 2000 when the government also officially requested the central bank to hold off from the move. The BOJ went ahead anyway and the decision became known as a key event for creating doubt over the BOJ’s willingness to ease for years to follow.

In a local media article last year, Ueda warned against a premature rate hike as he said chances for the BOJ to be able to increase rates weren’t so high, though it’s not zero.

“In any case, a serious consideration will be required at some point in the future over the extraordinary monetary easing framework that has stayed in place for longer than many expected,” Ueda wrote in last year’s Nikkei article.

Ueda holds a PhD from MIT and has maintained a close relationship with the BOJ as a professor even after he left the bank. He has moderated various BOJ conferences including one in November last year about the wage-growth mechanism. BLOOMBERG