By Takaya Yamaguchi and Kentaro Sugiyama
Tokyo (Reuters) -Japan’s government is likely to appoint Kazuo Ueda, an academic and a former member of the central bank’s policy board, as the Bank of Japan’s next governor, two government officials with knowledge of the matter told Reuters.
The government will also nominate Ryozo Himino, former head of Japan’s banking watchdog, and BOJ executive Shinichi Uchida as deputy governors, the officials said on condition of anonymity as they were not authorised to speak publicly.
Investors have repeatedly tried to push up Japanese government bond yields in recent months on expectations the BOJ will start to phase out its massive stimulus programme when a new governor takes over after Haruhiko Kuroda’s second term ends in April.
But most analysts said the appointment of Ueda was a surprise, and it was hard to tell immediately what that meant for changes, if any, in the bank’s near-term monetary policy direction.
The yen strengthened from around 131.55 yen per dollar to around 130.60 immediately after the Nikkei reported the appointments. It then extended its gains, with the dollar last down 1.2% at 129.94.
The government is expected to present the nominees to parliament on Feb. 14.
In an opinion piece that ran on the Nikkei in July last year, Ueda said warned the BOJ against prematurely raising interest rates just because inflation briefly exceeded 2%.
But he also said the BOJ must consider an exit strategy from ultra-loose monetary policy, and review its extraordinary stimulus programme at some point, according to the piece.
“This was quite a surprise. He wasn’t coming up in the predictions at all. But he’s an economist who has some past ties to the BOJ and he’s unlikely to be very hawkish, so normalisation will be slow at best,” said Tsuyoshi Ueno, senior economist at NLI Research Institute in Tokyo.
Ueda served on the BOJ’s board from 1998 to 2005. He voted against raising interest rates to 0.25 percent from zero in August 2000, arguing that the bank could wait a while longer given limited inflation. The BOJ later reversed its decision and cut rates again.
(Reporting by Tokyo newsroom, Akriti Sharma in Bengaluru; Writing by Leika Kihara; Editing by Jacqueline Wong, Sam Holmes and Kim Coghill)
