TOKYO, Feb 24, 2023 (BSS/AFP) - The Bank of Japan's long-standing monetary
easing policies are "appropriate", its next governor Kazuo Ueda told
parliament on Friday, suggesting no sudden changes to the bank's stance when
he takes the helm in April.

Under current boss Karuhiko Kuroda, the bank has unleashed a raft of
extraordinary ultra-loose policies -- from a negative interest rate to
spending vast sums on government bonds -- in a bid to boost the sluggish
economy.

It has stuck with these measures over the past year, despite pressure to join
the US Federal Reserve and other central banks in aggressively hiking
interest rates to tackle soaring inflation.

Ueda, an economics professor, told lawmakers that he saw the "continuation of
monetary easing as appropriate", warning of high levels of uncertainty in
financial markets and the global economy.

"It is necessary to keep monetary easing to support the economy and create an
environment where companies can raise wages," he said in his first public
address since being nominated by Prime Minister Fumio Kishida.

His comments came as data Friday showed consumer prices surged 4.2 percent
last month, their fastest pace since September 1981 and more than double the
bank's two percent goal.

The figure was fuelled in part by higher energy bills, while the contrast
between Fed tightening and the BoJ's easing has driven the yen down against
the dollar, making foreign goods more expensive in Japan.

But because the price hikes are not driven by demand or steady wage increases
the bank views them as temporary, and as such no reason to abandon its easing
policies.

"These cost-push factors will likely ebb in the future, and inflation in
consumer prices will likely drop below two percent towards the middle of the
next fiscal year," which runs from April 2023 to March 2024, Ueda said.

However, major Japanese companies including Toyota, Nintendo and Uniqlo
parent Fast Retailing have recently announced substantial wage increases -- a
rarity in a country where pay has long been stagnant.

While Ueda gave no timeframe for any policy tweaks Friday, he did say that if
the conditions for sustainable two percent inflation come into view, "then we
will make a step toward normalisation" of monetary policy.

The 71-year-old Ueda has a PhD in economics from the Massachusetts Institute
of Technology and is seen as a good communicator who prefers cautious
reflection over abrupt action.

The prime minister nominated him last week to replace Kuroda, who is stepping
down after a decade in the job. Ueda is expected to be easily approved in
parliament, where the ruling coalition commands a healthy majority.

He served on the BoJ's policy board between 1998 and 2005 but faces a tough
job as chair, with analysts calling the bank's easy-money policies
unsustainable in the long term.

"We believe that Ueda's team will transform current policy framework
eventually," UBS economists Masamichi Adachi and Go Kurihara said in a note
after the nomination.

"However, the timing and specific process are hard to predict, especially
when the US economy may slide into a recession."