Last year, there was a lot of discussion about Federal Reserve and Bank of Japan, whose policies have been widening all year long. This gap has been discussed for some time, so was the change of the BoJ governor. Governor Kuroda will step down soon and Kazuo Ueda will take office. There were some rumours that this change could mean a monetary policy shift.
FXMAG.COM: Basing on general circumstances and the GDP print, could Bank of Japan change its monetary policy path earlier than expected?
Overall, there is some consensus that the appointment of Kazuo Ueda as head of his central bank may increase the chances that the Bank of Japan will abandon its ultra-easy monetary policy and policy of controlling the yield curve and negative interest rates, which is becoming increasingly difficult to maintain at a time when inflationary pressures are rising, and other central banks are aggressively raising rates. Moreover, Japan's economy looks relatively healthy, giving the Bank of Japan an opportunity to roll back its policy of yield curve control that has been in place since 2016. However, if inflation rises faster than expected, or if the global economic outlook improves significantly, the BoJ might consider adjusting its policy course earlier than originally planned. Nevertheless, the evolution of policy depends on domestic demand and, in turn, on wage growth in line with the inflation rate, and changes are likely to take place after the appointment of a new central bank head in April.
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