Japan's PM nominates Kuroda for BOJ
A man cycles past the Bank of Japan headquarters in Tokyo. Photograph: Tomohiro Ohsumi/Bloomberg
Japan's prime minister Shinzo Abe nominated an advocate of aggressive policy action to head the Bank of Japan, challenging the opposition to back his push for radical action as officials warned that a nascent economic upturn could easily be derailed.
By choosing Asian Development Bank president Haruhiko Kuroda to take over at the central bank, Mr Abe is looking to deliver on an election pledge of overhauling monetary policy to revive the economy after nearly two decades of mild deflation and lacklustre growth.
"The new BOJ needs to accelerate its pace of asset accumulation and extend the maturities of government debt that it is buying," said Masayuki Kichikawa, chief Japan economist at Bank of America Merrill Lynch.
"By strengthening monetary easing, the BOJ will be able to stabilise the yen exchange rate. Then we will begin to see some positive impact on consumer prices from next year."
Academic Kikuo Iwata, who supports unconventional monetary policy, and BOJ official Hiroshi Nakaso, who has hands-on knowledge of the central bank's inner workings, were nominated as BOJ deputy governors today.
Mr Abe has already successfully pushed for changes at the central bank, which last month doubled its inflation target to 2 per cent and agreed to an open-ended asset buying programme from 2014, and the new leadership team is expected to push for even more aggressive action.
The nominations were no surprise to investors, having been well flagged recently, and there was little market reaction.
The three men need to be approved by both houses of parliament, which will vet them in coming days. Mr Abe does not have a majority in the upper house, and so needs opposition support for his BOJ picks to take office next month.
The head of the opposition Democratic Party, Banri Kaieda, said his party could make a final decision on the nominees on March 15th or March 18th.
Soon after the nominations were announced, the challenge facing the three was laid out as the finance minister and a BOJ board member both said that despite positive signs, a recovery in the world's third-largest economy was by no means certain.