Hitting price target, moving toward normalization, Kazuo Ueda backs Japan's easing

TOKYO (Reuters) - Bank of Japan nominee Kazuo Ueda said the central bank will need to consider policy normalization if the price outlook improves, and he now supports continued stimulus measures Kazuo Ueda said at his confirmation hearing in Congress that the central bank will stop large-scale bond purchases if it reaches its 2 percent target for stable inflation.

It will still take time to achieve this goal, he added "If the outlook for price trends is clearly expected to improve further, we will inevitably need to consider evaluating yield curve control or moving towards policy normalization," Kazuo Ueda said.

Japanese bond futures edged higher after Kazuo Ueda said the central bank's current easing was appropriate The yen erased modest gains as traders considered its comments on normalization.

Bank stocks fell The market's dovish moves suggested traders were having trouble drawing new conclusions from his comments.

Global investors and BOJ watchers are closely watching Kazuo Ueda's speech for clues about how he will conduct policy as central bank governor After a decade of massive stimulus, speculation is rife that the Bank of Japan, under a new governor, will adjust policy.

Japanese Prime Minister Fumio Kishida unexpectedly chose Kazuo Ueda as the governor of the central bank If confirmed, Kazuo Ueda, who served on the BOJ's policy committee two decades ago, would become the first academic to head the BOJ.

Kazuo Ueda said the sustainability of yield curve control needs to be considered if the BOJ decides that it must continue its strong monetary easing But he said he would not go into the details of yield curve control at the hearing and that there were various possibilities.

Shortening the duration of the target yield is one of many options, as the BOJ has been grappling with side effects of the policy framework TOKYO (Reuters) - Bank of Japan watchers are raising the risk of a surprise that incumbent Governor Haruhiko Kuroda could surprise international markets at his final meeting next month.

There is speculation that Kuroda may adjust policies to pave the way for the transition of the next governor, Kazuo Ueda The Bank of Japan's yield curve control program has presented Kazuo Ueda with a complex challenge.

Once he takes over as BOJ governor, he may face intense market pressure to adjust policy, even though he, as an economist, may prefer to take the time to carefully assess the unconventional stimulus measures of the past decade That's why some BOJ watchers have raised the risk of a possible surprise move by Kuroda at the meeting that ends on March 10.

Most economists expect policy adjustments to occur after Kazuo Ueda takes over as governor "It depends on how the market develops, but I think there is a 50-50 chance that the BOJ's target yield range will widen again in March" so that the new governor can respond in a calmer market environment.

to assess policy,” said Ryutaro Kono, chief Japan economist at BNP Paribas Ryutaro added that if the Bank of Japan did not act next month, Kazuo Ueda could face “massive Bond sell-off".

So far, Haruhiko Kuroda has said there is no need for further adjustments to the yield curve control policy after the December adjustment But he may have been aware of the current dynamics and the risk of an awkward start for the new governor.

Prompting this Risky economists believe Kuroda may still decide to help Kazuo Ueda to give him more time to think, as he and vice-governor Masayoshi Amamiya consider the most appropriate way to complete their terms .