Lawmaker: BOJ Head Nominee Ueda to Speak at Japan’s Lower House Feb. 24

Reuters

12:24 JST, February 16, 2023

TOKYO (Reuters) — Kazuo Ueda, the government’s nominee to become next Bank of Japan (BOJ) governor, will speak at a confirmation hearing at the lower house of parliament on Feb. 24, a ruling party official said on Thursday.

The hearing will be closely watched by markets for clues on how the 71-year-old academic could steer the central bank out its prolonged ultra-loose monetary policy.

The lower house will conduct the hearing on Ueda’s nomination in the morning, Shunichi Yamaguchi, head of the lower house steering committee, told reporters on Thursday.

The government’s deputy governor nominees – former banking watchdog head Ryozo Himino and Bank of Japan executive Shinichi Uchida – will also testify in the afternoon after Ueda, he said.

The date for the upper house hearing is expected to be decided at the chamber’s steering committee meeting to be held later on Thursday.

The government named Ueda as its pick to become next BOJ governor on Tuesday, a surprise choice that could heighten the chance of an end to its unpopular yield control policy.

The nominations need the approval of both chambers of the Diet, which is effectively a done deal since the ruling coalition holds solid majorities in both chambers.

A former BOJ board member, Ueda will succeed incumbent Haruhiko Kuroda, whose second, five-year term ends on April 8.

With inflation exceeding the BOJ’s 2% target, Ueda faces the delicate task of phasing out its yield control policy that has drawn increasing public criticism for distorting market function and crushing bank margins.

In a column issued last July, Ueda warned against raising rates prematurely but said the BOJ must eventually consider how to exit from its ultra-loose policy.

Under yield curve control (YCC), the BOJ guides short-term interest rates at -0.1% and caps the 10-year bond yield at 0.5% as part of efforts to sustainably hit its 2% inflation target.

Underscoring the difficulty of maintaining YCC, the 10-year bond yield remained stuck at the BOJ’s 0.5% cap on Thursday on market bets the central bank will eventually ditch the ceiling and allow long-term rates to rise more.