The Diet has approved the government’s nominees to fill two vacant seats on the Bank of Japan Policy Board.
Nomura Securities Co.’s Takahide Kiuchi and Takehiro Sato of Morgan Stanley MUFG Securities Co. were approved at a Lower House plenary session Thursday, after the Upper House gave the green light a day earlier.
The markets see Kiuchi and Sato, both chief economists at their financial institutions, as a positive step toward monetary easing even though some on the Policy Board are reluctant to pursue excessive monetary loosening.
The government had initially nominated Ryutaro Kono of BNP Paribas Securities (Japan) Ltd., but the proposal was voted down by the opposition-controlled Upper House due to questions about his negative stance on monetary easing. The government had apparently wanted to appoint candidates more acceptable to politicians.
The Policy Board comprises BOJ Gov. Masaaki Shirakawa, Deputy Govs. Hirohide Yamaguchi and Kiyohiko Nishimura, and six others. Members decide on monetary policy issues by majority vote.
The central bank has been searching for replacements since Seiji Nakamura and Hidetoshi Kamezaki’s five-year terms ended April 4, creating the first vacancies since March 2010.
U.S., eurozone hold key
Bank of Japan Policy Board member Koji Ishida on Thursday called for closer monitoring of the eurozone’s fiscal woes and the weak U.S. economic recovery.
“At the moment, the largest concern is overseas economies, centering on the eurozone’s debt problem,” Ishida said during a speech in the city of Kagoshima.
He warned that “it may take some time to see a fundamental resolution” in Europe, but added its debt crisis is unlikely to drastically deteriorate due to the efforts of countries such as Germany.
The domestic economy, meanwhile, has started to pick up moderately as work accelerates to rebuild areas affected by the March 2011 disasters, and will likely return to a moderate recovery path in the first half of the current fiscal year, Ishida predicted.
The BOJ expects external demand to have strengthened by the time reconstruction efforts in the Tohoku region start flagging. But Ishida warned that if the situation in Europe and the U.S. becomes more unstable and impacts rapidly developing nations, the negative effect on Japan’s economy would be considerable.