-- When Kazuo Ueda emerged as the front runner to be the next governor of the Bank of Japan early last year, former Treasury Secretary Larry Summers described the septuagenarian academic as the Asian nation’s version of Ben Bernanke.What Happens If Trump Can’t Post His $454 Million Bond
Yet at eight policy meetings as BOJ chief, Ueda has now adjusted policy or forward guidance four times, with Tuesday’s shift the most consequential by far. It’s a track record that suggests investors ought to brace for more change as Japan claws its way out of more than a decade of deflation and back toward monetary policy orthodoxy.
Ueda began his term dovishly, sticking to the script of Kuroda’s staunch easing stance, spurring economists to push back forecasts for tightening. He also sought to lower expectations — in contrast to his predecessor’s bold debut. Ueda next caught markets off guard in July when he adjusted the yield curve control program by expanding the range for 10-year bond yields. Yet even after that move, nearly two thirds of BOJ watchers viewed Ueda’s communication favorably. At that time, only 4% forecast the end of the negative rate by March this year.
At the December meeting, Ueda downplayed chances of an immediate interest rate hike, saying he wanted more evidence the price stability target was in sight. Come January, the bank’s quarterly report stated for the first time under his watch that the certainty of achieving the BOJ’s projections had continued to gradually increase.
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