div classBodysc17zpet90 cdBBJodivpBy Leika Kiharap
pTOKYO Reuters The Bank of Japan‘s rare reappointment of a veteran technocrat behind the country’s massive monetary stimulus positions the bank for an eventual exit from governor Haruhiko Kurodas radical policies when his term ends next year.pdivdivdiv classBodysc17zpet90 cdBBJodiv
pHaving spent most of his career at the BOJ‘s elite monetary affairs department, Shinichi Uchida, 59, was instrumental in drafting Kuroda’s “bazooka” assetbuying programme in 2013 and negative interest policy in 2016.p
pWhile those policies create an image of him being a proponent of heavy monetary stimulus, Uchida also led the BOJs drive to slow its huge bond buying by introducing yield curve control in 2016 – a policy that caps longterm interest rates at zero but also relieved the central bank from buying bonds at a set pace.p
pAs its balance sheet became bloated and the financial sector‘s pain from prolonged easing became more apparent, Uchida was instrumental in crafting steps to slow the BOJ’s purchases of risky assets and ease the strain on banks from low rates.p
pThe reappointment for another fouryear term as the BOJ‘s executive director, announced this month, will have Uchida, who joined the bank in 1986, oversee monetary policy design well beyond the end of Kuroda’s term in April next year.p
pUchida‘s technical expertise and deep experience mean the dismantling of YCC, whenever it happens, will go smoothly, while his bipartisan nature mean he will be a help, not a hindrance, to the rollback of Kuroda’s stimulus, say three sources familiar with the matter.p
p“Because he‘s created this complex framework, he’s probably the best person to roll it back,” said Mari Iwashita, chief market economist at Daiwa Securities and a veteran BOJ watcher.p
p“Thats his strength, as well as his ability to quickly change tack on policy when he sees fit.”p
pThe BOJ has six executive directors that assist the board in making decisions on key matters. The roles are highly sought after and offered to only a handful of top BOJ staff.p
pUchidas reappointment is unusual – historically, such positions last only a single fouryear term, after which the officials retire from the BOJ for private sector jobs.p
pNEITHER HAWK NOR DOVEp
pHaving spent most of his career at the monetary affairs department, Uchida made his mark with a knack for designing complex policy frameworks and his ability to navigate BOJ leadership transitions.p
pPeople who know him say Uchida is sharpminded and worked well under both the dovish Kuroda and his predecessor Masaaki Shirakawa, who was wary of ramping up stimulus too much.p
p“He‘s a genius in crafting sophisticated policy ideas,” one of people said. “It’s hard to brand him as a hawk or dove.”p
pThat means Uchida is well placed to craft plans to either prolong the lifespan of YCC, or gradually phase it out.p
pTo be sure, the BOJ is in no rush to withdraw stimulus as it focuses on underpinning a fragile economic recovery, rather than fret about the prospect of toohigh inflation.p
pBut some in the BOJ are wary of Japan becoming increasingly isolated in a global shift in central banking towards tighter monetary policy.p
pWhile Japans comparably subdued inflation allows the BOJ to keep rates low for longer than its counterparts, there is near consensus within the bank its next move will be to dial back – not ramp up – stimulus, the sources say.p
pUntangling YCC, a complex patchwork of measures to keep rates low while addressing the sideeffects of prolonged easing without upending markets, is no easy task.p
pThe BOJ traditionally spends years brainstorming scenarios on its next possible move, a process in which Uchida will likely be deeply involved, the sources say.p
p“If theres even a slim chance of a policy tweak in the long run, the BOJ needs to be ready,” a second source said. “Uchida will certainly play a key role in the process.”p
p Reporting by Leika Kihara Additional reporting by Takahiko Wada and Kentaro Sugiyama Editing by Sam Holmesp
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