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▼ With Abe’s Blessing, Kuroda Seen Heading for Another Term
- Category:Event
TOKYO (Jiji Press) — While Haruhiko Kuroda’s fate as Bank of Japan governor is seen by many as largely depending on whether Prime Minister Shinzo Abe stays in power, recent media surveys suggest that Abe’s ruling Liberal Democratic Party will win big in the House of Representatives election on Sunday.
Abe’s nearly-five-year-old reflationary policy agenda, dubbed Abenomics, featuring aggressive fiscal spending, structural reforms and massive monetary stimulus, is set to face the verdict of voters in the general election for the all-important lower chamber of Japan’s parliament.
Japan’s economy has gathered momentum since the Abe administration’s inauguration in December 2012. Economic and Fiscal Policy Minister Toshimitsu Motegi recently said it is likely that the economic recovery has since continued for 58 months through last month, the second-longest run of expansion since the end of World War II.
The BOJ introduced its “quantitative and qualitative” monetary easing in April 2013, soon after Kuroda took office as its governor, and continued to take novel steps, including a negative interest rate policy, to support Abenomics.
“I completely trust Gov. Kuroda’s monetary policy,” Abe told a House of Councillors Budget Committee meeting in January, in response to a question about who is likely to be the next BOJ governor. “I want him to move ahead in this direction.”
Given the prime minister’s support for Kuroda, financial market participants believe he is likely to be reappointed BOJ governor.
“It is necessary to continue the current easing policy patiently,” Takehiro Noguchi, senior economist at the Mizuho Research Institute, said, adding that Kuroda’s reappointment would give the strong impression at home and abroad that the central bank is committed to going ahead with the easing policy.
The Abenomics-driven recovery, however, has been fiercely criticized by opposition parties for failing to bring about pay increases. Despite the massive easing policy, the BOJ appears to have little chance of achieving its inflation target of 2 percent before Kuroda’s current term expires on April 8, 2018.
With the central bank and the government still pursuing their joint goal of combating deflation, there is no BOJ strategy in sight to exit from the unusual easing policy, which has led to the yen’s sharp depreciation and stock price surges but is now drawing concerns about its possible side effects.
In its campaign platform for the coming general election, Tokyo Gov. Yuriko Koike’s Kibo no To (Party of Hope) pledges to seek such an exit strategy in cooperation with the central bank, while expressing its readiness to accept the current easing policy for the time being.
Meanwhile, one problem for the possible reappointment of Kuroda may be his age, observers say. Kuroda will be 73 years old at the start of another term. If he completes the new five-year term, he would become the oldest BOJ governor under the current BOJ law, breaking the current record of the late Masaru Hayami, who was 77 at the end of his term.
Among other candidates to lead the central bank are BOJ Deputy Gov. Hiroshi Nakaso and Masayoshi Amamiya, an executive director at the central bank. Both have developed their careers within the BOJ.
Nakaso has broad international connections, while Amamiya has been involved in devising unconventional easing measures including the negative rate policy and a scheme to guide long-term interest rates.
“Given the need to draw up an exit strategy in the future, it is desirable for a former or current BOJ official to head the central bank,” Takeshi Minami, chief researcher at the Norinchukin Research Institute, said.
Other candidates include Columbia University Prof. Takatoshi Ito, who was Kuroda’s deputy when he served as vice finance minister for international affairs, and Japanese Ambassador to Switzerland Etsuro Honda, Abe’s economic policy brain.
Whoever fills the position, the next BOJ chief is expected to face greater pressure amid concerns about adverse effects of the massive easing policy, analysts say.
Abe’s nearly-five-year-old reflationary policy agenda, dubbed Abenomics, featuring aggressive fiscal spending, structural reforms and massive monetary stimulus, is set to face the verdict of voters in the general election for the all-important lower chamber of Japan’s parliament.
Japan’s economy has gathered momentum since the Abe administration’s inauguration in December 2012. Economic and Fiscal Policy Minister Toshimitsu Motegi recently said it is likely that the economic recovery has since continued for 58 months through last month, the second-longest run of expansion since the end of World War II.
The BOJ introduced its “quantitative and qualitative” monetary easing in April 2013, soon after Kuroda took office as its governor, and continued to take novel steps, including a negative interest rate policy, to support Abenomics.
“I completely trust Gov. Kuroda’s monetary policy,” Abe told a House of Councillors Budget Committee meeting in January, in response to a question about who is likely to be the next BOJ governor. “I want him to move ahead in this direction.”
Given the prime minister’s support for Kuroda, financial market participants believe he is likely to be reappointed BOJ governor.
“It is necessary to continue the current easing policy patiently,” Takehiro Noguchi, senior economist at the Mizuho Research Institute, said, adding that Kuroda’s reappointment would give the strong impression at home and abroad that the central bank is committed to going ahead with the easing policy.
The Abenomics-driven recovery, however, has been fiercely criticized by opposition parties for failing to bring about pay increases. Despite the massive easing policy, the BOJ appears to have little chance of achieving its inflation target of 2 percent before Kuroda’s current term expires on April 8, 2018.
With the central bank and the government still pursuing their joint goal of combating deflation, there is no BOJ strategy in sight to exit from the unusual easing policy, which has led to the yen’s sharp depreciation and stock price surges but is now drawing concerns about its possible side effects.
In its campaign platform for the coming general election, Tokyo Gov. Yuriko Koike’s Kibo no To (Party of Hope) pledges to seek such an exit strategy in cooperation with the central bank, while expressing its readiness to accept the current easing policy for the time being.
Meanwhile, one problem for the possible reappointment of Kuroda may be his age, observers say. Kuroda will be 73 years old at the start of another term. If he completes the new five-year term, he would become the oldest BOJ governor under the current BOJ law, breaking the current record of the late Masaru Hayami, who was 77 at the end of his term.
Among other candidates to lead the central bank are BOJ Deputy Gov. Hiroshi Nakaso and Masayoshi Amamiya, an executive director at the central bank. Both have developed their careers within the BOJ.
Nakaso has broad international connections, while Amamiya has been involved in devising unconventional easing measures including the negative rate policy and a scheme to guide long-term interest rates.
“Given the need to draw up an exit strategy in the future, it is desirable for a former or current BOJ official to head the central bank,” Takeshi Minami, chief researcher at the Norinchukin Research Institute, said.
Other candidates include Columbia University Prof. Takatoshi Ito, who was Kuroda’s deputy when he served as vice finance minister for international affairs, and Japanese Ambassador to Switzerland Etsuro Honda, Abe’s economic policy brain.
Whoever fills the position, the next BOJ chief is expected to face greater pressure amid concerns about adverse effects of the massive easing policy, analysts say.
- October 18, 2017
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