By Tetsushi Kajimoto
TOKYO (Reuters) – Japan’s government picked academic Kazuo Ueda as new central bank governor on expectations he can help keep inflation on target and sustain economic and wage growth, finance minister Shunichi Suzuki said on Friday.
“We fully paid attention to the potential impact on financial market in proceeding with this consideration,” Suzuki told reporters.
“We also took into account the importance of keeping close coordination with top officials of major central banks as well as the ability to send and receives high-quality messages to market players within and outside Japan,” Suzuki said.
The cabinet judged that Ueda, who is a well-known economics academic, was the most appropriate candidate to take over incumbent Haruhiko Kuroda, due to his deep insight on monetary affairs in terms of both theory and practice, he added.
The government picked BOJ executive Shinichi Uchida and former banking watchdog Ryozo Himino as the two deputy governors for their rich experience and knowledge of monetary policy and financial affairs.
The government on Tuesday formally presented the three nominees for the Bank of Japan (BOJ) posts for parliamentary approval, which is effectively a done deal, given the ruling coalition’s solid majority in both legislative houses.
The parliament holds confirmation hearings on the nominees on Feb. 24 at the lower house, followed by the upper chamber at a later date.
“I believe the nominations were made to demonstrate their comprehensive ability as one team,” Suzuki said.
He declined to comment when asked about whether the government and BOJ needed to review their joint statement issued in 2013, which includes a pledge to meet the bank’s 2% price goal quickly.
He added that should be judged when the new governor assumes the job.
Suzuki also said Japan is coordinating with other countries on the agenda for when the Group of Seven (G7) financial leaders’ meeting takes place on the sidelines of the broader G20 gathering later this month.
“We are now at the final stage on coordination with other countries, hoping that we make decision (on the agenda.)”
(Reporting by Tetsushi Kajimoto; Editing by Jacqueline Wong and Sam Holmes)
Japan’s finance minister Taro Aso said on Monday the nominees chosen to serve on the Bank of Japan’s policy board were selected with its price target in mind.
The nominations come as Prime Minister Shinzo Abe seeks to set up an “encompassing” policy board that could allow growth of the world’s third-largest economy.
The country’s ongoing monetary easing measures, popularly known as Abenomics, have not always been successful in ending deflation and strengthening Japan’s economy.
Aso said that the two nominees, Etsuro Honda and Goushi Kataoka, were chosen with an eye to the central bank’s existing price target of 2%. Honda is a special adviser to the prime minister on economic and fiscal policy, and Kataoka is a former executive director of the Japan Research Institute.
The nominations will go to a Parliament vote, but it is expected to pass given Abe’s majority.
The central bank has already set up an independent committee to review its inflation-targeting policy and will appoint Honda and Kataoka to it. The committee is expected to look into a range of issues including what kind of data the Bank of Japan looks at when deciding policy, and whether its inflation target is appropriate.
The Bank of Japan is currently in the middle of its second round of stimulus measures. These include buying government bonds and exchange-traded funds to boost the money supply and lower borrowing costs. But the measures have so far been ineffective in achieving the BOJ’s price target.
The new nominees could help the central bank move closer to achieving that goal by providing independent views on the issues faced by the Bank of Japan.
If the two new appointments are approved, they will join the current members of the Bank of Japan’s policy board and help shape future monetary policy. It remains to be seen whether the central bank can finally achieve its price target and put Japan’s economy on a sustainable path of growth.