BOJ head nominee Ueda to speak at Japan’s lower house on Feb 24 – lawmaker

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TOKYO — Kazuo Ueda, the government’s nominee to become the next Bank of Japan (BOJ) governor, will speak at a confirmation hearing at the lower house of parliament on Feb. 24, a ruling party official said on Thursday.

The hearing will be closely watched by markets for clues on how the 71-year-old academic could steer the central bank out its prolonged ultra-loose monetary policy.

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The lower house will conduct the hearing on Ueda’s nomination in the morning, Shunichi Yamaguchi, head of the lower house steering committee, told reporters on Thursday.

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The government’s deputy governor nominees – former banking watchdog head Ryozo Himino and Bank of Japan executive Shinichi Uchida – will also testify in the afternoon after Ueda, he said.

A steering committee for the upper house failed to decide on the date of its chamber’s confirmation hearings, the committee’s chief told reporters after a meeting on Thursday.

The government named Ueda as its pick to become next BOJ governor on Tuesday, a surprise choice that could heighten the chance of an end to its unpopular yield control policy.

The nominations need the approval of both chambers of the Diet, which is effectively a done deal since the ruling coalition holds solid majorities in both chambers.

A former BOJ board member, Ueda will succeed incumbent Haruhiko Kuroda, whose second, five-year term ends on April 8.

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With inflation exceeding the BOJ’s 2% target, Ueda faces the delicate task of phasing out its yield control policy that has drawn increasing public criticism for distorting market function and crushing bank margins.

In a column issued last July, Ueda warned against raising rates prematurely but said the BOJ must eventually consider how to exit from its ultra-loose policy.

Under yield curve control (YCC), the BOJ guides short-term interest rates at -0.1% and caps the 10-year bond yield at 0.5% as part of efforts to sustainably hit its 2% inflation target.

Underscoring the difficulty of maintaining YCC, the 10-year bond yield remained stuck at the BOJ’s 0.5% cap on Thursday on market bets the central bank will eventually ditch the ceiling and allow long-term rates to rise more. (Reporting by Tetsushi Kajimoto and Leika Kihara; Editing by Shri Navaratnam, Bradley Perrett and Lincoln Feast.)