Prime Minister Shinzo Abe shortened his list of candidates for Bank of Japan (8301) governor as he seeks to end decades of reluctance at the central bank to accept responsibility for the nation's inflation rate.
Abe is probably narrowing down his picks, Economy Minister Akira Amari told reporters in Tokyo today. The government should unveil the name, and replacements for deputies whose terms are up in coming weeks, by the end of February, the ruling party's upper-house legislative affairs chief said last month.
Abe, who took office five weeks ago, today said he expects the BOJ to take responsibility for its 2 percent inflation target -- a point he's made repeatedly since the bank agreed to set the objective Jan. 22. Outgoing Governor Masaaki Shirakawa, by contrast, during his tenure emphasized that ending two decades of deflation isn't something the bank can do on its own.
"It's very likely we will see a big change in monetary policy toward easing," said Hiromichi Shirakawa, chief Japan economist at Credit Suisse Group AG in Tokyo and a former Bank of Japan official. "This is the most crucial event for Japan's economy this year," because any failure to appoint a more aggressive BOJ chief "will reverse the trend of a weak yen, damage corporate sentiment and hurt Japan's economy," he said.
The yen has tumbled 13 percent since mid-November in anticipation of the stepped-up monetary stimulus that Abe's Liberal Democratic Party has called for. The LDP in December swept to victory in an election for Parliament's lower house. A surge in the yen in recent years has eroded the competitiveness of Japan's exporters, with a report today showed manufacturing employment fell below 10 million for the first time since 1961.
David Fuller's view I assume that Shinzo Abe will have the BoJ that he and most other Japanese citizens currently want before the end of April.
(See also yesterday's comment, which requires a subscription logon to read in full.)