Japan's Lower House on Thursday approved the government's nominees to replace two policymakers who will retire from the Bank of Japan's board in July, all but sealing full approval for the appointments in the legislature.
Hajime Takata, a private sector economist and a bond market expert, will replace Goushi Kataoka, a vocal advocate of massive stimulus policy. Meanwhile Naoki Tamura, a senior adviser at Sumitomo Mitsui Banking Corp., is set to succeed former commercial banker Hitoshi Suzuki.
The appointments are expected to be approved by the upper chamber on Friday given the ruling bloc's solid majority in both houses.
With the replacement of Kataoka with the less dovish Takata, the new appointees may tilt the BOJ away from the radical monetary easing approach pursued by reflationist members of the board, some analysts say.
"The board's balance will become more centrist," said Naomi Muguruma, senior market economist at Mitsubishi UFJ Morgan Stanley Securities.
Prime Minister Fumio Kishida's first pick of new BOJ board members has been closely watched by markets as offering clues on who he might choose as successor to Governor Haruhiko Kuroda, when his term ends early next year.
"The nomination makes it likely the post-Kuroda leadership will keep a distance from reflationary policy," said Hiroshi Shiraishi, senior economist at BNP Paribas Securities.
"Given Japan's low growth and inflation, it's unthinkable for the BOJ to raise rates continuously," he said.
"But the possibility will become higher for the BOJ to fine-tune its stimulus policy by the end of 2023, or even ditch negative rates."