For an incoming central bank boss, Kazuo Ueda confronts a challenge rare in modern Japanese economics: Acknowledge climbing inflation warrants a break from business as usual without scaring people that an increase in interest rates is imminent.
This will require more than the usual needle-threading beloved of policymakers the world over.
The first draft of Ueda¡¯s response came Friday when the new Bank of Japan chief began distancing himself from some of the easing preferences of his predecessor. In Ueda¡¯s first meeting as governor, officials dropped pandemic-era guidance that the main interest rate ¡ª already negative ¡ª could go lower still. And he initiated a review of much of the BOJ¡¯s actions since the late 1990s, when the bank¡¯s independence was in its infancy. This means that Japan and the world should get a decent heads up on any significant departure from the status quo.
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