BOJ nominee eyes forceful moves
Source: Agencies |
March 5, 2013, Tuesday
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Print Edition
Print Edition
THE Japan government's nominee to be the next central bank governor outlined more forceful policy prescriptions yesterday to finally defeat deflation, saying he would not set any limits on the amount of cash the Bank of Japan pumps into the economy.
Underlining expectations he would be an aggressive governor, Haruhiko Kuroda told lawmakers the BOJ's current policies were not powerful enough to boost inflation to 2 percent, a target he said the central bank should strive to achieve in two years.
Kuroda suggested the most natural way to ramp up the central bank's stimulus for the economy would be through huge purchases of longer-dated government bonds. The BOJ should also consider kicking off its open-ended asset purchases early, rather than waiting until the scheduled start date of 2014.
"It would be natural for the BOJ to buy longer-dated government bonds in huge amounts," Kuroda said in a confirmation hearing in the lower house of parliament. "But the central bank also needs to scrutinize market developments at the time, as well as the potential drawbacks."
Prime Minister Shinzo Abe nominated Kuroda, president of the Asian Development Bank, to be the new governor in a push for bolder central bank efforts to end nearly two decades of debilitating deflation and revive the fortunes of an economy stuck in its fourth recession since 2000.
His nomination is expected to be approved by parliament because opposition parties, whose support would be needed in the upper house, have indicated they would back him.
Japan's former top currency diplomat, Kuroda, 68, would replace incumbent Masaaki Shirakawa, 63, who is due to leave office on March 19 at the end of his term along with his two deputy governors.
The prime minister's demands for bolder action have pushed the yen to a three-year low and the stock market to a four-year high as investors anticipated much looser policies.
Underlining expectations he would be an aggressive governor, Haruhiko Kuroda told lawmakers the BOJ's current policies were not powerful enough to boost inflation to 2 percent, a target he said the central bank should strive to achieve in two years.
Kuroda suggested the most natural way to ramp up the central bank's stimulus for the economy would be through huge purchases of longer-dated government bonds. The BOJ should also consider kicking off its open-ended asset purchases early, rather than waiting until the scheduled start date of 2014.
"It would be natural for the BOJ to buy longer-dated government bonds in huge amounts," Kuroda said in a confirmation hearing in the lower house of parliament. "But the central bank also needs to scrutinize market developments at the time, as well as the potential drawbacks."
Prime Minister Shinzo Abe nominated Kuroda, president of the Asian Development Bank, to be the new governor in a push for bolder central bank efforts to end nearly two decades of debilitating deflation and revive the fortunes of an economy stuck in its fourth recession since 2000.
His nomination is expected to be approved by parliament because opposition parties, whose support would be needed in the upper house, have indicated they would back him.
Japan's former top currency diplomat, Kuroda, 68, would replace incumbent Masaaki Shirakawa, 63, who is due to leave office on March 19 at the end of his term along with his two deputy governors.
The prime minister's demands for bolder action have pushed the yen to a three-year low and the stock market to a four-year high as investors anticipated much looser policies.
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