TOKYO (Reuters) - The Japanese government has nominated Yukitoshi Funo, an adviser to Toyota Motor, to join the Bank of Japan's deeply divided nine-member policy board, surprising market watchers who said they knew little about the businessman's views.
Funo, 68, would replace Yoshihisa Morimoto, a former utility executive whose five-year term expires at the end of June.
Morimoto and three other dissenters had opposed additional monetary stimulus which the board eventually approved in a razor-thin 5-4 vote last October.
The close vote has given greater significance to the board's composition, as it suggested the difficulty Governor Haruhiko Kuroda might face should he want to ease further.
"(Funo's) name was totally news to me. I think it's rare for the government to pick a person from the auto industry for the BOJ board," said Yasunari Ueno, chief market economist at Mizuho Securities.
The government followed the usual practice of naming a business executive to replace a board member who came from business circles. But it was the first time under the current law that it picked a person linked to a manufacturing company.
"Given his background, Funo could be sensitive to moves in the yen and overseas markets. He may be supportive of further easing if a strengthening of the yen pressures the BOJ to act," Ueno said.
Funo also serves as CEO at the Institute for International Economic Studies, a thinktank founded under Toyota's initiative.
Funo's nomination came weeks after Yutaka Harada, known as a reflationist, joined the board, which is split between Kuroda and his two deputies, who are adamant about hitting its inflation target, and other members who are cautious of acting again just to accelerate inflation.
The nomination must be approved by both houses of parliament but is seen as a near certainty as Prime Minister Shinzo Abe's ruling coalition holds a solid majority in both chambers. The date for a nomination vote has not yet been set.
Two years into the BOJ's radical experiment to revive the economy through massive purchases of government bonds and other assets, inflation has ground to a halt and economic growth remains fragile, casting doubt on the central bank's strategy to pull the country out of decades of deflation.
When it launched the stimulus programme in April 2013, the BOJ pledged to achieve 2 per cent inflation in roughly two years.
The BOJ now says inflation will hit 2 per cent around this fiscal year ending in March 2016. But even that timeframe appears elusive as prices are seen staying flat or falling for much of this year on low energy costs and tame wage growth.
