BOJ Chief Nominee Ueda Known as Outspoken Economist who can Integrate Theory, Practice

The Yomiuri Shimbun

2:00 JST, February 12, 2023

The nominee to be the next Bank of Japan governor, Kazuo Ueda, 71, is widely known as an economist who can integrate theory and practice, with a background in academia specializing in international economics.

Japan experienced a turbulent time in the seven years from 1998, when Ueda served as a member of the Bank of Japan’s Policy Board.

In those days, Ueda often sparked controversy in discussions at the bank’s meetings to set monetary policy.

In August 2000, while the Japanese economy was recovering from the financial crisis that had caused the collapse of the Long-Term Credit Bank of Japan, Ueda was in the minority at a monetary policy meeting when he voted against ending the central bank’s zero interest rate policy.

He argued that there was a risk of a recurrence of deflationary fears in response to moves by then Bank of Japan Gov. Masaru Hayami and other executive members to tighten monetary policy.

Yet he was also cautious about quantitative easing, which was introduced in 2001 to supply massive amounts of money to the market following the economic downturn, saying, “It is difficult to find a positive meaning in it.”

Since retiring as a member of the bank’s Policy Board, Ueda, who speaks fluent English, has chaired discussions at international symposiums sponsored by the Bank of Japan that invited prominent scholars and former heads of central banks worldwide.

He remains a special advisor to the Bank of Japan’s Institute for Monetary and Economic Studies, and is highly trusted by the bank’s officials and other experts in Japan and abroad.

“He is a leading outspoken debater at monetary policy meetings who can integrate theory and practice,” said Totan Research Co. chief economist Izuru Kato, who has known Ueda well since the days when the nominee was involved in monetary policy.

Many view him as a person who strikes the proper balance, in contrast to incumbent BOJ Gov. Haruhiko Kuroda, who has been aggressive in implementing bold monetary easing with the goal of overcoming deflation, which had caused prices to fall continuously.

Commenting on the central bank’s current policy of continuing its massive monetary easing, he said in a media interview on Friday, “Given the current state of the economy and prices, the policy currently taken by the Bank of Japan is appropriate. For the time being, I think it is necessary to continue monetary easing.”

Under Kuroda’s leadership, the central bank has supplied unprecedented amounts of money to the market.

Speaking about the Bank of Japan’s exit strategy to normalize its monetary policy, Ueda said: “It will be quite difficult if we are really going to take the exit strategy. And I fully understand that.”

Ueda specializes in international economics. After serving as a professor at the University of Tokyo, he was appointed as the first member of the Bank of Japan’s Policy Board under the new Bank of Japan Law that was came into force in April 1998.

Ueda also served as chairman of the Investment Advisory Committee of the Government Pension Investment Fund, and was an outside director at the Development Bank of Japan.