Instant View: Incoming BOJ chief Ueda says current low rates appropriate By Reuters

(Reuters) – Incoming Bank of Japan (BOJ) Governor Kazuo Ueda said on Friday it was appropriate to maintain ultra-loose monetary policy as inflation has yet to sustainably and steadily meet the central bank’s 2% target.

COMMENTARY:

MOH SIONG SIM, CURRENCY STRATEGIST, BANK OF SINGAPORE, SINGAPORE

“It seems to be a continuation of the stance taken by (Haruhiko) Kuroda, though I think it’s difficult to tell right now. He’s treading a fine line in the sense of trying to find a way to exit (YCC) without being too disruptive on the dollar/yen direction.”

“It’s not a surprise that he’s sounded the way he is to get the market not too excited. The market is trying to read the policy bias. However, this may not matter too much, as picking Ueda in itself is a strong signal… that the government may increasingly want a departure from the past policies.”

“He hasn’t really said all that much as whether he’s for or against the dovish policy.”

BACKGROUND:

* The government has nominated academic Ueda to head the Bank of Japan as the decade tenure of Governor Haruhiko Kuroda nears its close.

* Unlike Kuroda, who arrived with a clear mandate to beat deflation with massive stimulus, Ueda faces the delicate task of phasing out his predecessor’s radical and complicated policy framework without derailing a fragile economic recovery.

* Nearly half of Japanese firms say that new leadership at the central bank should revise its negative interest rate policies, while more than a quarter say its price target should be changed, according to a Reuters monthly poll.

* As the first post-war BOJ governor to come from academia, Ueda brings a wealth of experience helping guide the Japanese economy through rough waters – including during his time at the central bank’s nine-member board from 1998 to 2005.

* Upon approval by parliament, Ueda will assume the top BOJ post on April 9 and chair his first policy-setting meeting on April 27-28.