Exiting Easing Policy to Be Biggest Challenge for Next BOJ Chief

Economy

Tokyo, Feb. 12 (Jiji Press)--With Japan planning to nominate economist Kazuo Ueda as the next Bank of Japan governor to succeed Haruhiko Kuroda, whose term ends in April, the biggest challenge for the new chief is widely viewed to be exiting from the Japanese central bank’s long-standing monetary easing policy.

The new BOJ governor will also likely be involved in discussions to revise the 2013 joint statement between the Japanese government and the central bank seeking to achieve 2 pct inflation.

The current massive monetary easing policy conducted under Kuroda centers around a yield curve control scheme in which a short-term policy interest rate of minus 0.1 pct is applied to part of financial institutions’ current account deposits at the BOJ and 10-year government bond yields are guided to around zero pct.

Through such measures, the BOJ has aimed to support the Japanese economy and create a virtuous economic cycle that enables continuous rises in prices and wages.

The central bank’s large purchases of Japanese government bonds, needed to keep interest rates low, have left behind a distorted bond market, however.

[Copyright The Jiji Press, Ltd.]

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