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 per cent target. COMMENTARY: NAKA MATSUZAWA, CHIEF STRATEGIST, NOMURA, TOKYO'He's dovish, a
Incoming Bank of Japan 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 per cent target."He's dovish, as expected; or at least he's not saying anything specific about a policy change."
"I'm also looking for whether they think the global economy will have a soft landing or enter a recession; if they think there will be a soft landing, particularly for the U.S. economy, it increases the chance of a policy change at the BOJ." "Ueda did not provide a clear clue for further monetary policy but he did mention that the monetary policy needs to 'respond to demand-driven inflation but not immediately respond to supply-driven inflation', implying that he may remain with the ultra-loose policy as we are facing a supply-driven inflation issue globally."
"He has echoed similar comments from other BOJ officials in recent days, stating that the BOJ's current monetary easing is appropriate, it takes time for the impact of monetary policy to be felt in the economy and that economic uncertainties are high.""He wants to watch developments in micro economy, mentioned that it is important to create environment for wage growth and put an emphasis on clear communication with financial markets.
"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."* The government has nominated academic Ueda to head the Bank of Japan as the decade tenure of Governor Haruhiko Kuroda nears its close.
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