- Daily Zen
After all, Japan’s Prime Minister Shinzo Abe has got it made: he is to get rid of current BOJ Governor Shirakawa. The nomination of Haruhiko Kuroda as the next governor of the Bank of Japan is expected to bring basic and crucial changes in the monetary policy. The Shinzo Abe’s choice has raised the possibility of further monetary stimulus as Haruhiko Kuroda is known as the zealous supporter of more active monetary easing.
On the 28th of February, finally Japan’s Prime Minister Shinzo Abe made his choice as he announced the nomination of Haruhiko Kuroda as the next governor of the Bank of Japan as well as two nominations for deputy governor, Kikuo Iwata and Hiroshi Nakaso. Under the law, the nominations have to gain support of both houses in parliament early in March. Without a majority in the upper house, Shinzo Abe will have to convince opposition to back his decision. As ruling Liberal Democratic Party wants a committee hearing to start in the second week of March, the Prime Minister has time to win the support and he does not have to much time to do that.
According to a statement, Masaaki Shirakawa as well as his two deputies will resign on the 19th March; one day later Haruhiko Kuroda, Kikuo Iwata and Hiroshi Nakaso will fill in for them.
The nomination of Haruhiko Kuroda, the president of the Asian Development Bank, is not surprising for analysts as he has proved himself to be a consistent and true-blue critic of the BOJ’s policies and approach. He has international experience as he served as the Japan’s financial diplomat. Therefore his profile was much more attractive than Toshiro Muto’s one. Mr. Muto was backed by the Ministry of Finance, but the lack of international experience counted against his candidacy.
Haruhiko Kuroda, whose views on economy are very similar to Japan’s Prime Minister Shinzo Abe’s vision, is widely expected to back the government’s monetary policy in order to help the country get rid of main plights. Moreover, analysts believe that the new Governor of the Bank of Japan will do whatever it takes to meet the inflation target of 2 percent.
Japan has been recently struggling amid the fifth recession in 15 years and the territorial dispute over the Senkaku Islands. For all these gripes, Japan’s Prime Minister Shinzo Abe has his own “medicine.” He is convinced that public spending, eased monetary policy and implementation of fiscal stimulus are the best to boost the country’s economy. However, some analysts believe that the biggest problem of Japan is the lack of innovation in big businesses, not deflation or the dispute with China which hampered Japanese exports. But Shinzo Abe does not consider it the main issue of the world’s third economy.
The nominations of Haruhiko Kuroda, Kikuo Iwata and Hiroshi Nakaso were widely expected by insightful observers as these three men are believed to be a chance to introduce all ideas of the Japan’s government.
Analysts are waiting to see what the new team will bring. And expectations are high. Analysts and market will not be satisfied with minor changes, they are waiting for a quality change. The question is whether Japan’s Prime Minister with the new BOJ team can rise to the challenge.