Japan's new central bank chief will take baby steps in any shift away from the radical monetary experiment of his predecessor, if recent comments are any guide, but a deeper history of his thinking shows a taste for bolder action
Markets are rife with speculation that Kazuo Ueda, who becomes Bank of Japan governor on Sunday, will dismantle incumbent Haruhiko Kuroda's massive stimulus programme that has drawn criticism for distorting market pricing and crushing bank profits.
So far, Ueda has offered few clues on when and how the BOJ could phase out the current stimulus package that combines huge asset buying, negative short-term interest rates and a cap on the 10-year bond yield set under yield curve control . The remark suggests Ueda may seek to end YCC in a single blow, rather than in several stages, some analysts say.
"The BOJ must come up with a strategy towards an exit," he said, adding that U.S. and Australian central banks "got the job done with a single adjustment" when they ended yield control. "The BOJ could expand the allowance band around its yield target as early as June. But a full-blown overhaul of YCC and end to negative rates might take years," he said.
In any case, Ueda will likely deliver clearer guidance on the future policy path than Kuroda, who at times was criticised for wrong-footing markets with abrupt policy changes.
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