The upper house of Japan's Parliament endorsed Haruhiko Kuroda as the governor of the Bank of Japan on Friday, clearing the way for the long-term central bank critic to officially take charge of the top post.
His confirmation has cemented expectations that the central bank will soon embark on aggressive monetary easing to beat deflation. The markets are betting on a move as early as next month.
He won the backing of the lower house on Thursday. The upper house also voted today in support of Kikuo Iwata and Hiroshi Nakaso, who will serve as deputy governors.
Kuroda holds the view that the policy easing conducted by the BoJ has not been enough to achieve the 2 percent inflation target. The new leadership is in favor of further monetary easing and purchase of longer term bonds to address part of the current economic woes.
Kuroda and his deputies were nominated by Prime Minister Shinzo Abe, who has been strongly advocating for aggressive monetary easing since his election in December. Under pressure from Abe in January, the Bank of Japan adopted a 2 percent inflation target and announced open-ended asset purchases set to begin in 2014.
Japan's economy was hit by an earthquake in March 2011, the deadliest the country has ever witnessed. The tremor, the subsequent tsunami and the nuclear disaster shattered an already weak economy. Japan has been battling deflation for the past 15 years and the Global Financial Crisis only worsened the situation.
Abe has promised to pull the economy out of deflation and add more fiscal and monetary stimulus to bring Japan back on growth track.
Meanwhile, the Japanese government upgraded its assessment of the economy for a third straight month.
"The Japanese economy is showing movements of picking up recently, while weakness can be seen in some areas," a monthly report from the Cabinet Office said.
Japan's corporate profits are showing signs of improvement, mainly among large firms and business investment is starting to level off, the report said. Firms' judgment on current business conditions too showed signs of improvement, the report added.
Also, exports are moderately decreasing recently and industrial production is showing movements of picking up, it noted. Private consumption remained firm, according to the report.
In the report, the government said it expects BoJ to "pursue aggressive monetary easing in order to achieve the price stability target of 2 percent at the earliest possible time."
Regarding short-term economic prospects, the report noted that the weakness would remain in some areas for the time being but recovery is expected to resume gradually supported by the improvement in confidence, export conditions as well as the impact of monetary and fiscal policies.
The government still appeared to be concerned about the situation overseas. The report said the slowing down of overseas economies is a downside risk to the domestic economy.
by RTT Staff Writer
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