A Surprise Pick to Lead the Bank of Japan Faces a Wrenching Choice

He served on the Bank of Japan’s policy board from 1998 to 2005. When he joined, the bank had just gained statutory independence, and Mr. Ueda was key in pushing the institution to innovate, said Gene Park, a professor of political science at Loyola Marymount University in Los Angeles, who has written about the Bank of Japan.

On the board, Mr. Ueda was one of the first people to recognize the possible dangers of deflation and to suggest responding with unorthodox measures, Mr. Park said. Mr. Ueda was an early supporter of setting a specific inflation target and shaping public expectations about price increases through a process called forward guidance. The bank later incorporated both ideas into its policy framework.

In 2000, Mr. Ueda was one of two members of the bank’s policy board who voted to continue its experiment with zero interest rates.

“He was, at that time really, I think arguably the only policy board member who was a true monetary policy expert,” Mr. Park said, adding that he was “fighting against the stream.”

More recently, he has emphasized the importance of taking a careful approach to changing the country’s monetary policy. “It’s necessary for the Bank of Japan to establish an exit policy” from its current unorthodox framework, he wrote in The Nikkei in July. He was less clear, however, on when or how that might take place.

Article source: https://www.nytimes.com/2023/02/13/business/bank-of-japan-kazuo-ueda.html