Bank of Japan Gov. Masaaki Shirakawa’s planned early exit, almost three weeks before his term runs out, will accelerate a leadership transition that is likely to aid Prime Minister Shinzo Abe’s campaign for aggressive easing, analysts say.
Shirakawa, 63, said Tuesday he will exit March 19, the same day two deputy governors, Kiyohiko Nishimura and Hirohide Yamaguchi, will leave their posts.
The central bank may be set for “a really fundamental policy shift,” said Richard Jerram, chief economist at Bank of Singapore Ltd., who has analyzed Asian economies for two decades. “When you have three new people in charge, they basically start from scratch.”
While the BOJ last month announced plans for U.S. Federal Reserve-style open-ended asset purchases, they aren’t due to start until next January.
“Shirakawa’s resignation will likely push forward the timing of bold monetary easing action,” said Akito Fukunaga, chief rates strategist at RBS Securities Japan Ltd., a unit of Royal Bank of Scotland Group.
The yen slid to its weakest level in almost three years against the dollar and euro on speculation the government will hasten the selection of the next BOJ chief to take further steps to end deflation.
“The new BOJ governor is expected to be someone who will push easing hard,” said Masato Yanagiya, the head of currency and money trading in New York at Sumitomo Mitsui Banking Corp. “The yen weakness trend is likely to remain.”
During a news conference Tuesday night, Shirakawa stressed that he is not resigning early because of pressure from the government.
“There was no pressure at all from the government, this was my own decision,” Shirakawa said after meeting with Abe, adding that it was not an act of protest. He said he made the decision Monday so the BOJ’s new leadership can start together.
But observers see it otherwise.
“It’s the equivalent of waving a white flag for unconditional surrender,” said Shuichi Obata, senior economist at Nomura Securities Co. “Shirakawa didn’t share the government’s view that the central bank is responsible for ending deflation.”
Shirakawa assured the stability of Japan’s financial system with liquidity injections during the global credit crisis, and again in the wake of the devastating March 2011 earthquake and tsunami.
At the same time, his failure to end trenchant deflation stoked criticism from lawmakers, and ministers have pledged a replacement who shares Abe’s determination to end price declines.
Shirakawa’s exit is part of a global changing of the guard, with Canada’s Mark Carney to take the helm of the Bank of England in July. In China, Gov. Zhou Xiaochuan will step down next month, the China Securities Journal said Saturday. In the U.S., Janet Yellen may be a candidate to replace Chairman Ben S. Bernanke at the Federal Reserve a year from now.
Abe has repeatedly said he wants the BOJ to take responsibility for the 2 percent inflation target it agreed to set last month. His government has defined ending deflation as central to efforts to revive the economy.
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