Japan’s Kishida says he will nominate new BOJ head next month
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The nomination needs approval from the both chambers of parliament to take effect.
PHOTO: REUTERS
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TOKYO - Japanese Prime Minister Fumio Kishida said on Sunday he would nominate a new Bank of Japan governor next month, as markets test whether the central bank will change the ultra low-rate policy of the dovish Haruhiko Kuroda.
Mr Kishida initially told a TV Tokyo programme that he would decide on Mr Kuroda’s replacement by considering the economic situation for April.
But when pressed, he acknowledged this would likely be in February, “considering parliament’s schedule”. He did not elaborate.
Mr Kuroda’s five-year term ends on April 8, and that of his two deputies’ end on March 19.
The nomination needs approval from the both chambers of parliament to take effect.
Therefore, the government needs to decide much earlier to give parliament time to follow procedures to approve Mr Kishida’s pick before Mr Kuroda’s term expires, analysts say.
Speculation is rife among some market players that the central bank may shift away from its stimulus policy when the BOJ leadership changes.
There’s also talk about possible changes to the policy accord between the central bank and the government in which the BOJ pledges to achieve its 2 per cent inflation target at the earliest possible time.
“The BOJ and the government have been working as one to achieve economic growth that involves structural wage hikes and reach the price-stability target stably and sustainably,” Mr Kishida said. “This basic stance won’t change.”
During the TV Tokyo programme, Mr Kishida said it is too early to comment on whether there is a need to alter the policy accord between the government and the central bank.
Since inflation is at 41-year highs, markets have been testing the BOJ’s commitment to Mr Kuroda’s ultra-loose monetary policy, an outlier globally where other central banks have been raising interest rates to fight inflation.
The BOJ stunned markets last month by doubling the allowed band to 50 basis points
