The choice of former Bank of Japan board member Kazuo Ueda to be the next central bank governor is a well-calibrated decision by Prime Minister Fumio Kishida at one of the biggest make-or-break moments of his time in office.
Kishida has been caught in a bind between financial markets anticipating a pivot by the BOJ to a tighter monetary policy and some quarters of ruling party lawmakers who are urging him — directly or indirectly — to stick with the Abenomics economy-boosting program that has become synonymous with monetary easing.
The news on Friday that Ueda, 71, will likely be nominated as the next BOJ governor stunned financial markets, sending the yen sharply higher against the U.S. dollar and Japanese government bond yields surging in a knee-jerk reaction. A sense of calm later returned after Ueda said the current monetary easing should continue for now.