Haruhiko Kuroda nominated as next governor of Bank of Japan
Haruhiko Kuroda has been nominated by Japan’s government to be the next governor of the country’s central bank.
Haruhiko Kuroda is currently the head of the Asian Development Bank and is seen as a supporter of aggressive monetary easing to help revive Japan’s economy.
The government, which recently won a general election, wants the Bank of Japan to do more to boost growth.
Both the upper and lower houses of Japan’s parliament will now need to vote and approve the nomination.
Kikuo Iwata and Bank of Japan official Hiroshi Nakaso were also nominated to serve as the central bank’s deputy governors.
Prime Minister Shinzo Abe won the general election on a platform of promises to help revive Japan’s economy, which has seen years of stagnating growth.
A more aggressive monetary policy stance by the central bank has been something that Shinzo Abe has been advocating for, citing it as key to spurring a fresh wave of economic growth.
During his election campaign Shinzo Abe had even hinted that the government may look at altering the law that ensures the central bank’s independence if it does not take adequate steps.
Although Shinzo Abe toned down his rhetoric later on, it did indicate how crucial the appointment of a new governor would be, not just to the relations between the government and the central bank, but also the BOJ’s independence going forward.
Analysts said that if Haruhiko Kuroda’s nomination is approved by the parliament, it would be a win-win situation.
“This clearly indicates that the government and the central bank will be working towards the same target and there will be an agreement on what direction the Japanese economy should take from here,” said Junko Nishioka of RBS Securities.
Junko Nishioka added that with Haruhiko Kuroda being a supporter of aggressive policies, it was unlikely that the government take the extreme step of altering the BOJ law.
“It does necessarily mean that the BOJ is not going to give up its independence,” she added.
Among the policies suggested by Shinzo Abe has been a call for stoking inflation as a means to boosting domestic demand.
Japan, unlike many other Asian nations, has been fighting deflation or falling consumer prices for best part of the past decade.
It has been a big hurdle in its attempts to boost domestic consumption as consumers tend to put off purchases in the hope of getting a cheaper and better deal later on.
Shinzo Abe has hinted that the central bank should print “unlimited yen” to help fight deflation and encourage price growth.
The idea being that with more money floating around, consumers will have more cash to spend and that will help drive up demand and consumer prices.
Under pressure from the government, the central bank doubled its inflation target to 2% last month, a move seen as key by many analysts to help revive domestic demand.
Haruhiko Kuroda, who is seen as a advocate of inflation target, has suggested that the central bank should try and achieve a 2% inflation rate within two years.
“Under Kuroda-san the BOJ will take a proactive approach towards achieving the inflation target,” said Junko Nishioka.
The government’s aggressive stance has resulted in a sharp decline in the yen.
The Japanese currency has dipped nearly 15% against the US dollar since November last year.
The yen fell further on Thursday, down by nearly 1% against the US dollar, after the government announced Haruhiko Kuroda as its nominee to head the central bank.