New BOJ chief likely to be put forth Feb 10
The government is considering submitting to parliament an appointment plan for the next Bank of Japan governor, likely on Feb 10, ruling party sources said yesterday.
The current term of Governor Haruhiko Kuroda, who took the helm at the central bank in 2013, ends in April. The government will also seek approval for new deputy governors, whose appointments will likely be submitted at the same time, the sources said.
Financial markets are keeping close tabs on who Prime Minister Fumio Kishida selects to head the central bank, as they will be sure to face the formidable challenge of eventually charting an exit from years of monetary easing under Kuroda.
Current Deputy Governor Masayoshi Amamiya and former deputy chiefs Hiroshi Nakaso and Hirohide Yamaguchi have been floated as strong candidates to replace Kuroda.
Amamiya, along with the other deputy governor Masazumi Wakatabe, will see their current terms as deputy chiefs end in March.
Kishida has not yet hinted at who he will appoint, saying in early January that he will choose “the person most appropriate” for the job.
The government plans to revise a joint accord made with the BOJ in 2013, government sources said earlier. Details will be worked out with the next governor, with an eye to making the central bank’s inflation target more flexible, according to the sources.
Under Kuroda, the BOJ embarked on aggressive monetary easing measures to deal with chronic deflation.
Its bold monetary easing policy formed a key pillar of the “Abenomics” economy-boosting programme set out under former Prime Minister Shinzo Abe.
Kuroda has told parliament that he has no intention of staying on for another term.
“The government will make preparations to present the best candidate to parliament for approval,” Finance Minister Shunichi Suzuki said at a press conference yesterday.
The nominees will set out their stances and answer questions from lawmakers in both houses of parliament. Arrangements are being made for the hearings to be held on Feb 16 and 17 in the powerful House of Representatives and then on Feb 20 and 21 in the House of Councillors, the sources said.
There is significant speculation in financial markets that the BOJ will move away from its current monetary policy, with critics pointing to the limits of quantitative easing, as well as its potential negative side effects.
After making large purchases of government bonds to inject liquidity into the financial system, the BOJ owns about half of all state debt.
The BOJ’s swollen balance sheet poses a challenge to the central bank. If the bank decides to abandon its policy of monetary easing, the decision is expected to spur a sharp rise in longterm interest rates.