Tokyo reacts to the "surprise appointment"
As a follow-up to my recent post on Ueda Kazuo’s expected nomination to lead the Bank of Japan, I joined Bloomberg’s Daybreak Asia to discuss Ueda’s prospects.
You can view the interview here.
With a few days to think further, I am struck by the differences between the Abe-Kuroda relationship and the likely Kishida-Ueda relationship.
In the case of the former, you had a prime minister elected in part on the basis of his plans for macroeconomic policy and for the Bank of Japan in particular, the public at his back, and his party unified under his leadership. In Kuroda you had a Bank of Japan governor who was sympathetic to the prime minister’s goals but had been a senior official at the Ministry of Finance and head of the Asian Development Bank, having the managerial experience and institutional relationships expected of a BOJ governor.
The Kishida-Ueda relationship is different in almost all aspects. Kishida has been reluctant to outline a particular direction on macroeconomic policy (and has in fact been constrained by Abe’s choices). The LDP is far from united, not least on fiscal and monetary policy questions, Kishida’s base of support within the party is fragile, and his approval ratings have been in a prolonged slump. Ueda, meanwhile, has an unconventional background for a BOJ governor and has not managed a large organization, although of course is highly knowledgeable about monetary policy. Maybe the pragmatism that Kishida and Ueda is the appropriate quality for the BOJ’s thorny problems — certainly preferable to either a dyed-in-the-wool reflationist or monetary hawk — but it’s also possible that Ueda will be outmaneuvered by the other actors with a stake in the direction of monetary policy.
Here’s a roundup of some of the stories worth reading about Ueda’s appointment.
Inoue Tetsuya, now a senior researcher at Nomura who staffed Ueda when he was on the policy board, discusses Ueda’s personality and approach in an interview (jp) in the Asahi Shimbun.
“Ruling party response mixed as next BOJ head choice comes as surprise” — Kyodo.
Takahashi Yōichi, who was part of Abe’s brain trust, argues that Ueda will be fine since the BOJ is now a “subsidiary” of the government.
Amamiya has offered two reasons for not accepting the governorship: (1) that his history in executing the BOJ’s easing policies would make it difficult for him to conduct an objective review and (2) that the BOJ should, like its peers, be headed by the holder of a Ph.D. in Economics. Nikkei’s Kawanami Takeshi says that these explanations are not necessarily convincing, but notes that Amamiya has long indicated that he was stung by criticisms of the BOJ by mainstream economists outside of Japan dating back to the 1990s, and wanted greater alignment between the bank and the economics discipline.
LDP policy chief Hagiuda Kōichi declines to comment on Ueda before his nomination is formally submitted, but said, “Reform is necessary while current policies continue.”
Constitutional Democratic Party leader Izumi Kenta said his party would decide its stance on Ueda after seeing his intentions regarding revising the BOJ’s easing policies — and he added, “The name came as a surprise. The government must be having considerable difficulty with the appointment.”
Amazon Japan is completely sold out of copies of Ueda's memoir from his time on the BOJ policy board.