The Liberal Democratic Party-led government will nominate Asian Development Bank President Haruhiko Kuroda as the next Bank of Japan governor and scholar Kikuo Iwata as one of two deputy governors, official sources said Monday.
Both prospective nominees back Prime Minister Shinzo Abe’s focus on aggressive monetary easing to defeat deflation.
During a meeting, Abe informed Natsuo Yamaguchi, leader of New Komeito, of his intention to nominate Kuroda, 68, as BOJ chief, and Gakushuin University professor Iwata, 70, and BOJ Executive Director Hiroshi Nakaso, 59, as the central bank’s two deputies, the sources said.
New Komeito is the coalition partner of Abe’s LDP.
Facing reporters after the meeting, Yamaguchi said he believes all three basically meet the conditions that New Komeito imposed for the posts, namely the ability to manage large organizations like the BOJ, skills to communicate well with market players and the ability to send effective messages to other countries.
Abe plans to present his nominees to the Diet by midweek.
Iwata said he was offered the post and he would accept it.
Both Kuroda, who served as vice finance minister for international affairs between 1999 and 2003 and has extensive international connections, and Iwata have urged the BOJ to carry out bold monetary easing to fight deflation.
Kuroda and Iwata have welcomed the BOJ’s acceptance of Abe’s 2 percent inflation target, with both saying the goal should be achieved in about two years. The two have also said the central bank can carry out further monetary easing.
“There needs to be a revision to (the BOJ) law,” Iwata said last month, adding that the law should stipulate that the central bank would manage the monetary policy to achieve an inflation target set by the government.
BOJ Gov. Masaaki Shirakawa will step down March 19 along with his two deputies before his term expires on April 8.
Chief Cabinet Secretary Yoshihide Suga said the government will propose to the Diet the nominees this week. “Markets have appreciated the bold monetary easing policy advocated by the Abe government,” he said. “It is most important to create conditions to promote the policy.”
The government is expected to make arrangements with opposition parties for Diet approval of its nominations, as the ruling coalition lacks a majority in the House of Councilors.
The appointment of the BOJ governor and deputy governors must be approved by both chambers of the Diet.
Executives of the Democratic Party of Japan are expected to give positive consideration to the plan to nominate Kuroda.