Japanese Prime Minister Fumio Kishida said on Sunday he will nominate a new Bank of Japan governor next month as markets test whether the central bank will reverse dovish Haruhiko Kuroda’s ultra-low rate policy.
Kishida first said on TV Tokyo that he would decide on Kuroda’s replacement after considering the economic situation by April, but when pressed, acknowledged that it would likely be in February, “considering the parliament’s schedule.” He did not elaborate.
Kuroda, whose five-year term ends on April 8, has stuck to policies aimed at raising prices and growth, even with inflation at 41-year highs and a doubling of the BOJ’s target, and as central banks raised interest rates elsewhere.
The term of office of the two Kuroda MPs ends on March 19. Three nominations must be approved by both houses of parliament.
The BOJ stuck to its ultra-easy policy on Wednesday, defying investors who have recently sought to breach the bank’s cap on the 10-year government bond yield. But with Kuroda also sounding optimistic about wage growth, expectations are growing that the BOJ will end its expansionary experiment this year.
Last week’s test followed the BOJ’s surprise decision in December to double the yield target band to 0.5% above or below zero. There is also speculation about changes to the policy agreement between the central bank and the government, in which the BOJ commits to achieving its 2% inflation target as soon as possible.
Kishida said it was too early to comment on whether the deal needed to be changed, but said there would be no change to the “basic stance” that his government and the BOJ are working together “to achieve economic growth that includes structural wage increases and achieving the price target stability stably and sustainably”.
Read Now :<strong>Japan estimates release of water from Fukushima to begin in ‘spring or summer’</strong>
