Kentaro Koyama, our Japan Chief Economist, discusses the appointment of Kazuo Ueda as BoJ Governor, his monetary policy stance, and the impact on future monetary policy in our latest #dbInsights.
1) What is significant about the appointment of Kazuo Ueda as BoJ Governor?
Mr. Ueda served as a member of the Policy Board of the Bank of Japan (BoJ) from 1998-2005 after serving as a professor of economics at the University of Tokyo. He returned to the University of Tokyo as a professor after leaving BoJ and has been involved in the BoJ's monetary policy and research over the past quarter century, including as a special advisor to the BoJ's Institute for Monetary and Economic Studies. He is also known to have many of his students within the BoJ. Therefore, there is an impression that a member of the BoJ's family has been promoted to the position of Governor this time, and communication between the new Governor Ueda and the BoJ staff will probably proceed smoothly.
2) What is the monetary policy stance of the new Governor Ueda?
In the Diet hearing, the new governor Ueda emphasized that the challenge for monetary policy going forward is to achieve the price stability target. In other words, Ueda is not thinking about a normalization for its own sake, but will continue monetary easing if it is difficult to achieve the price stability target, and will normalize it if it sees a clear path towards the target based on the economic and inflation developments and outlook. However, given his reference to the side effects of the current monetary easing, Deutsche Bank believes that it is unlikely that the current policy framework will be maintained as is for an extended period of time.
3) What is the impact on the BoJ's future monetary policy?
Replacements of the governor and two deputy governors among nine policy board members could change the stance of the policy board as a whole. In addition, differences in opinion within the board members may become clearer under the new Governor Ueda, who comes from an academic background and has led active discussions in the policy board before. I would also very much like to see more research-based policy management and improved communication with financial markets.
4) What are the key points to be noted?
The macroeconomic environment is changing dramatically in Japan as well, with higher inflation and wage growth. In overseas, however, the effects of monetary tightening are becoming more apparent. The first thing to watch is how monetary policy will be adjusted in response to these changes in the surrounding environment. In the somewhat longer term, I would also like to focus on the point of whether the joint statement between the BoJ and government will be revised, and whether a review of the effectiveness of monetary policy to date will be conducted.
Home
Kentaro Koyama, our Japan Chief Economist, discusses the appointment of Kazuo Ueda as BoJ Governor, his monetary policy stance, and the impact on future monetary policy in our latest #dbInsights.
1) What is significant about the appointment of Kazuo Ueda as BoJ Governor?
Mr. Ueda served as a member of the Policy Board of the Bank of Japan (BoJ) from 1998-2005 after serving as a professor of economics at the University of Tokyo. He returned to the University of Tokyo as a professor after leaving BoJ and has been involved in the BoJ's monetary policy and research over the past quarter century, including as a special advisor to the BoJ's Institute for Monetary and Economic Studies. He is also known to have many of his students within the BoJ. Therefore, there is an impression that a member of the BoJ's family has been promoted to the position of Governor this time, and communication between the new Governor Ueda and the BoJ staff will probably proceed smoothly.
2) What is the monetary policy stance of the new Governor Ueda?
In the Diet hearing, the new governor Ueda emphasized that the challenge for monetary policy going forward is to achieve the price stability target. In other words, Ueda is not thinking about a normalization for its own sake, but will continue monetary easing if it is difficult to achieve the price stability target, and will normalize it if it sees a clear path towards the target based on the economic and inflation developments and outlook. However, given his reference to the side effects of the current monetary easing, Deutsche Bank believes that it is unlikely that the current policy framework will be maintained as is for an extended period of time.
3) What is the impact on the BoJ's future monetary policy?
Replacements of the governor and two deputy governors among nine policy board members could change the stance of the policy board as a whole. In addition, differences in opinion within the board members may become clearer under the new Governor Ueda, who comes from an academic background and has led active discussions in the policy board before. I would also very much like to see more research-based policy management and improved communication with financial markets.
4) What are the key points to be noted?
The macroeconomic environment is changing dramatically in Japan as well, with higher inflation and wage growth. In overseas, however, the effects of monetary tightening are becoming more apparent. The first thing to watch is how monetary policy will be adjusted in response to these changes in the surrounding environment. In the somewhat longer term, I would also like to focus on the point of whether the joint statement between the BoJ and government will be revised, and whether a review of the effectiveness of monetary policy to date will be conducted.