The Liberal Democratic Party-led government hopes to hold discussions with the opposition on picking either Toshiro Muto or Kazumasa Iwata, both former Bank of Japan deputy governors, as the next head of the central bank, sources said.
Prime Minister Shinzo Abe, who is set to leave on his U.S. trip Thursday, plans to consult Deputy Prime Minister Taro Aso, who is also the finance minister, and other government officials on the matter after his return Sunday, the sources said Tuesday.
The government will decide its nominees for the next BOJ governor and two deputy governors while taking into account the opinions of opposition parties, the sources said.
Muto, 69, a former vice finance minister, is chairman of Daiwa Institute of Research, while Iwata, 66, an ex-official of the now-defunct Economic Planning Agency, is president of the Japan Center for Economic Research. Both served as BOJ deputy governors for five years from March 2003.
The administration hopes to submit the nominations to the Diet in late February for approval, they said.
BOJ Gov. Masaaki Shirakawa is set to step down March 19. His official five-year term runs until April 8, but he has announced his decision to quit early so his successor and the two new deputy governors can all assume their posts at the same time. His two deputies, Hirohide Yamaguchi and Kiyohiko Nishimura, finish their terms on March 19.
The government is working to select the next BOJ head from among several candidates, including economists. All of the candidates support bold monetary easing and inflation targeting, as advocated by Abe.
But the government is increasingly focusing on someone with experience in monetary policy management and the ability to communicate well with foreign officials and financial markets, at a time when criticism is growing abroad that the BOJ’s current monetary easing is aimed at artificially driving down the yen, the sources said.
Aso is believed to support Muto’s candidacy, as he is known for his strong connections with bureaucrats and politicians as well as for his management and policy coordination abilities.
Iwata, for his part, has long called on the BOJ to adopt an inflation target. The central bank, pressed by Abe’s government, agreed to introduce a 2 percent goal at its monetary policy meeting in January.