Friday, March 15, 2013
DJ: BOJ Nominee Kuroda Wins Parliament's Approval, Gears Up for Further Easing
TOKYO--Japan's parliament on Friday approved the government's pick for the new Bank of Japan leadership, setting the stage for the incoming governor, Haruhiko Kuroda, to push ahead with more aggressive easing measures than his predecessor.
The nominations of Mr. Kuroda and his two deputies--Kikuo Iwata and Hiroshi Nakaso--passed a vote in the upper house following their approval in the lower house on Thursday, ensuring that they take over from the current leadership when they step down on March 19.
Mr. Kuroda, who has criticized policies under current Gov. Masaaki Shirakawa, has told his confirmation hearings that he was ready to do "whatever it takes" to achieve 2% inflation in two years, a target that the BOJ was forced to adopt in January, soon after Prime Minister Shinzo Abe came into power on a platform calling for further action from the BOJ.
The 68-year-old Mr. Kuroda, who is stepping down as the president of the Asian Development Bank to take on the new role, told this month's hearings that the BOJ should step up its purchases of Japanese government bonds by increasing the amount as well as buying longer bonds. He has also said buying of more risk assets by the central bank was an option.
The former Japanese top currency official has also said the BOJ should consider bringing forward the starting date of its planned "open-ended" purchases of JGBs from January of next year.
Even with the approval of the three to lead the central bank, one potential hurdle has emerged over the fate of Mr. Kuroda.
Since Mr. Shirakawa is stepping down before his term ends on April 8, the vote on Friday only confirmed Mr. Kuroda for that three-week period.
That had been considered largely a formality but, the main opposition group, the Democratic Party of Japan, has said that its approval in the current vote would not necessarily mean endorsement for Mr. Kuroda's five-year term.
"This is only a driver's permit," DPJ president Banri Kaieda said on Thursday.
The ruling party needs opposition support in the upper house to win approval for the nominees. Other opposition parties have been against Mr. Kuroda because they do not consider him bold enough.
While most BOJ watchers believe the party is unlikely to torpedo the nomination in a second round, the uncertainty could tinge what happens at the next policy board meeting on April 3-4.
The Nikkei Stock Average has 43% since mid-November when Mr. Abe first starting talking about the need for stronger action by the BOJ in the run-up to his election a month later.
The prospect of a large addition to Japan's money supply has meanwhile sent the yen sharply lower against other major currencies, giving a boost to Japan's big exporters. That has pushed the dollar as high as Y96.71 from below Y80 four months ago. As 0104 GMT, the dollar was at Y96.20.
But traders say that both moves are now vulnerable to pullbacks with focus on the new board's first meeting.