Amid inflation worries, parliament assents Kazuo Ueda as Bank of Japan chief

After receiving parliamentary confirmation on Friday, the next governor of the Bank of Japan will assume responsibility for guiding the third-largest economy in the world through inflation and other impending challenges.

A day after the lower house of parliament had approved Kazuo Ueda's nomination, the upper house also approved it.

The 'Abenomics'

Ueda comes from an academic background uncommon for a governor of the Bank of Japan. He has pledged a smooth changeover from "Abenomics," the ultra-loose monetary policies of his predecessor, former Prime Minister Shinzo Abe.

The Japanese economy had been mired in deflation—a persistent spiralling down of prices—for decades. To fight deflation, "Abenomics" strategies based on zero or negative interest rates.

Nonetheless, in December, the consumer inflation rate in Japan reached a 41-year high of 4%. Inflation is rising faster than the central bank's target rate of 2%, according to recent data.

Haruhiko Kuroda's term ends

Haruhiko Kuroda, whose second five-year term ends on April 8, is succeeded by Ueda. Later this month, Ueda will preside over his first Bank of Japan policy meeting.

Japan has maintained its short-term interest rates at -0.1% and its target yield on 10-year Japanese government bonds at almost zero under Kuroda.

Ueda, economics expert with a doctorate in economics from the Massachusetts Institute of Technology, has so far stressed stability and consistency while acknowledging the difficulty of his task and indicated he won't make any fast hiking movements.

'Ueda won't abandon'

Several analysts predict that Ueda won't immediately abandon his predecessor's zero-interest policy. Ueda, a member of the policy board of the Bank of Japan since 1998, played a role in developing the most recent monetary policies.

To offset inflationary pressures, the US Federal Reserve and other central banks across the world have been hiking interest rates.

And it's anticipated that trend will persist. The Goldman Sachs economists predict that the central bank would increase its benchmark short-term rate from 4.6% to around 5.6%, which is higher than the 5.1% level the Fed had pencilled in late last year.