Photo/Illutration The Bank of Japan’s Policy Board members, including Governor Kazuo Ueda, center, attend a monetary policy meeting in Tokyo on April 28, 2023. (Pool)

The Bank of Japan embarked on a new era under new BOJ Governor Kazuo Ueda at his first Policy Board meeting on April 28, deciding to start a review of its long monetary easing policy practiced under his predecessor. 

The central bank will comprehensively assess the impacts that the monetary easing measures of more than 20 years has had on the Japanese economy, including the monetary easing program of a “different dimension” under former BOJ Governor Haruhiko Kuroda.

Ueda became the BOJ governor on April 9.

The Policy Board meeting was the first for the BOJ’s new regime under Ueda along with two new vice governors.

At the April 28 meeting the BOJ decided to continue the monetary easing measures that it has practiced under Kuroda, including yield curve control, the action of curbing long-term interest rates by purchasing government bonds.

As for the review, the statement issued after the meeting said that the bank has implemented various monetary easing policies for 25 years since the Japanese economy plunged into deflation in the late 1990s.

The statement added, “These measures have interacted with and influenced wide areas of Japan’s economic activities, prices and financial sector. In light of this, the bank has decided to conduct a broad perspective review of monetary policy, with a planned time frame of around one to one and a half years.”

The BOJ has operated various monetary easing measures such as quantitative easing, quantitative and qualitative monetary easing, and a negative interest rate, since it introduced a zero interest rate policy in 1999.

At an inaugural news conference on April 10, Ueda said, “A powerful monetary easing policy has continued for more than 20 years. We may as well comprehensively evaluate it and, with the purpose of finding out how we should proceed from here, examine and review it.”

In accordance with the decision at the April 28 meeting, the BOJ will now review the effectiveness of the monetary easing measures as well as their by-products.

On how long the review will take, Ueda said at the Diet before starting his new post, “It’s probable that the review will take plenty of time.”

Shinichi Uchida, one of the new vice governors, also said before taking up his new position that it’s helpful to know central banks in the United States and Europe have taken up to one and a half years to conduct similar reviews.

The BOJ has conducted “assessments” of its monetary easing policies in 2016 and 2021.

It completed the assessments in two to three months following the decisions to conduct them.

The bank modified its policies based on the results of the assessments.

Therefore, experts say that how the latest review will impact the bank’s policies will be a crucial point.

Another notable occurrence from the latest meeting was that the BOJ deleted the forward guidance on future policy rates from its statement.

The previous statement said that the bank “expects short- and long-term policy interest rates to remain at their current or lower levels,” but the latest statement didn’t contain this sentence.

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