Uchida’s remarks are likely to keep market players on high alert over surprise adjustments from the BoJ. — Reuters
TOKYO: The Bank of Japan’s (BoJ) new deputy governor Shinichi Uchida says that if the bank adjusts its yield curve control programme, it may come as a surprise, amid lingering market speculation over change as new leadership takes over the BoJ.
The bank shouldn’t communicate its policy decisions in advance, including any changes surrounding its yield curve control programme, as they’re decided at a policy board meeting, Uchida said in response to questions in parliament yesterday.
“Due to the nature of yield curve control, it’s hard to get the market’s price on a change beforehand,” Uchida said.
Uchida’s remarks are likely to keep market players on high alert over surprise adjustments from the BoJ.
Some have already concluded that any tweak in the yield control mechanism has to be a sudden move if the central bank is to avoid the risk of a massive bond sell-off by indicating changes in advance.
Uchida is a veteran policy architect at the BoJ and is seen as playing a key role in navigating the fate of the central bank’s massive easing programme over his five-year term.
The BoJ is in the middle of a major leadership transition, as Uchida and Ryozo Himino assumed their deputy governor roles last week. Kazuo Ueda is set to take the helm on April 9, after a decade of extraordinary stimulus led by Haruhiko Kuroda.
Kuroda became known for surprises during his term, with the latest one in December jolting global financial markets.
Although he has pledged careful communication, it’s possible Ueda could also take markets unawares. — Bloomberg
