BOJ plans to exit from easy policy next year but needs some good fortune
By Leika Kihara
TOKYO (Reuters) -Bank of Japan Governor Kazuo Ueda will continue to dismantle the central bank's ultra-easy monetary policy settings and look to exit the decade-long accommodative regime sometime next year, an inherently risky plan that would require skilful execution.
Ultimately, however, the BOJ chief's exit strategy will require a bit of good fortune too, especially given global uncertainties including the Middle East conflict and worries about whether the U.S. economy could achieve a soft landing as well as China's growth trajectory.
Ueda's intentions are based on interviews with six sources familiar with the BOJ's thinking, including government officials with direct interaction with the bank.
Ueda will stick to a pattern he established six months in his tenure, which is to move gradually toward an exit while maintaining the dovish rhetoric of his predecessor, the sources say.
Since taking the helm in April, the central bank chief has mostly echoed his predecessor's pledge to keep monetary policy ultra-loose until sustained achievement of the BOJ's 2% price target comes into sight.
With inflation exceeding 2% for over a year, however, Ueda has steadily been phasing out the Kuroda-era stimulus starting with a removal in April of a commitment to keep rates at low levels.
Yet, Ueda will be mindful of the narrow exit path as even small hints could trigger a spike in bond yields and upend the BOJ's plan for a soft-landing.
«The BOJ's main message now is to maintain ultra-loose policy, even it seems to conflict with what it's actually doing,» one source said on condition of anonymity as he was not authorised to speak publicly.
«Given uncertainty over the economic outlook, the BOJ probably wants to wait at
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