Photo: Agence France Presse
Japan’s parliament on Friday approved a new central bank management team that is widely expected to support the government’s demands for more action to stoke the world’s third-biggest economy.The upper house gave the green light to Haruhiko Kuroda as Bank of Japan governor, with the finance veteran and long-time BoJ critic seen as likely to launch aggressive monetary easing measures, after his predecessor drew heavy criticism for failing to turn around Japan’s fortunes.
Lawmakers also approved the nominations of Kikuo Iwata and Hiroshi Nakaso as Kuroda’s deputies, with all three clearing the vote hurdle with comfortable margins.
Japan’s leading opposition party had warned it would vote against Iwata — a strong supporter of monetary easing and of giving Tokyo more control over the independent BoJ — but his nomination passed by a count of 124 votes in favour with 96 votes against.
The BoJ’s new management team, which was approved by the lower house on Thursday, is expected to take up their positions next week.
Prime Minister Shinzo Abe nominated the 68-year-old Kuroda, viewing him as a kindred spirit likely to back the premier’s prescription of big spending and aggressive monetary easing to drag Japan out of years of deflation that has crimped private spending and corporate investment.
During parliamentary confirmation hearings, Kuroda vowed that he would do “everything possible” to reverse years of falling prices, while criticising previous BoJ administrations for failing to fix the problem.
“High hopes are resting on the ability of the Bank of Japan’s new leadership to revitalise the economy,” said London-based Capital Economics in a note.
The yen was little moved by the vote, but the currency has been under pressure for months on easing speculation after Abe’s administration swept to power in landslide December elections, pledging to fix the economy and install like-minded leadership at the Bank of Japan.
Kuroda, who has announced his resignation as head of the Manila-based Asian Development Bank, may have limited options, however, after the BoJ in January announced the launch of an unlimited easing programme and the adoption of a two-per cent inflation target aimed at beating deflation.
The asset purchase policy is similar to the US Federal Reserve’s unlimited monthly bond-buying scheme, known as quantitative easing.
Kuroda’s proposal to buy longer-maturity assets and bring the unlimited asset-purchase plan forward underwhelmed markets. Analysts are now looking to the new BoJ team’s first policy meeting next month.
The outspoken Abe clashed with Shirakawa on policy matters, previously warning that he might change a law guaranteeing the bank’s independence if it did not follow his policies, stirring protests from central bankers abroad.
Copyright (2013) AFP. All rights reserved.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.