Asian markets breathed a sigh of relief on Friday as the incoming head of Japan’s central bank soothed fears of an early end to super-easy monetary policy, nudging bond yields lower globally.
Kazuo Ueda, who will take over as governor of the Bank of Japan (BOJ) in April, began three hours of speaking to parliament at 9:30 a.m. (0030 GMT), offering markets a first glimpse of how the new-look central bank could steer an exit from ultra-low interest rates.
So far, Ueda has pledged to maintain ultra-loose monetary policy because inflation has yet to sustainably and steadily meet the central bank’s 2% target, and there was little indication that he would quickly unwind the BOJ policy called yield curve control (YCC).
“There have been high hopes that Ueda will bring a hawkish twist to the BOJ, but early remarks in his confirmation speech say anything but,” said Matt Simpson, senior market analyst at City Index.
Ueda’s confirmation hearing in the lower house comes as markets renew their attack on YCC, taking bets on a near-term interest rate rise.
Japan’s five-year government bond yield fell a little to 0.235%, from the previous close of 0.240%. Ten-year bonds did not trade early on Friday, due to thin liquidly, but bond futures extended gains.
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