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Japan's Abe Nominates Haruhiko Kuroda For BoJ Top Job

Japan's Abe Nominates Haruhiko Kuroda For BoJ Top Job
2/27/2013 11:01 PM ET

Japanese Prime Minister Shinzo Abe on Thursday nominated Asian Development Bank President Haruhiko Kuroda for the post of Bank of Japan Governor, boosting expectations that the central bank will go ahead with plans to further expand stimulus.

Kuroda, a long-time proponent of inflation targeting, has suggested that Japan should achieve 2 percent inflation in two years. He also supports additional purchase of government bonds by the central bank.

Abe also picked academic Kikuo Iwata and BoJ official Hiroshi Nakaso as the central bank's deputy governors. The Cabinet submitted the nominations to a Parliamentary Committee on Thursday.

The candidates will be required to give testimony in the Parliament, before lawmakers at both lower and upper houses vote on their nominations.

Governor Masaaki Shirakawa will step down from the post on March 19 along with his two deputies. Shirakawa will chair his last Policy Board meeting on March 6-7.

After assuming office in December, Abe called on BoJ to embark on aggressive monetary easing. Bowing to pressure, the central bank in January announced its intention to start open-ended asset purchases from next year, while doubling the inflation target to 2 percent.

Abe's recent policy actions have drawn criticism from world leaders and sparked talks of a currency war, as the measures to kindle inflation have led to significant weakening of the yen.

Kuroda, 68, was first elected to the ADB Board of Directors in November 2004 and was appointed as President in February 2005. He was re-elected for a full five-year term in 2006 and then in 2011.

Before joining ADB, Kuroda was Special Advisor to the Cabinet of Japanese Prime Minister Junichiro Koizumi and a professor at the Graduate School of Economics at Hitotsubashi University in Tokyo. He had also served as Japan's Vice Minister of Finance for International Affairs until 2003.

The nomination of Iwata, a Professor at Tokyo's Gakushuin University, however, has raised many eyebrows as he has been a critic of the BoJ for last two decades.

On Wednesday, the Japanese government upgraded its assessment of the economy for a second consecutive month in February, saying that the economy is bottoming out, though weakness can be seen in some areas.

A survey by Markit Economics revealed Thursday that the country's manufacturing sector continued to experience worsening operating conditions during February. However, the headline Markit/JMMA Purchasing Managers' Index rose to 48.5, its highest reading since last June, from January's 47.7.

Still, the reading remained below the 50-threshold for a ninth successive month, suggesting deterioration in business activity.

Japan's industrial production rose 1 percent month-on-month in January, increasing for a second straight month, data from the Ministry of Economy, Trade and Industry said today.

by RTT Staff Writer

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