Haruhiko Kuroda's second term as governor of the Bank of Japan — which appears almost guaranteed as the government has renominated him to the Diet, which is controlled by Prime Minister Shinzo Abe's ruling coalition — will test the Abe administration's bid to overcome the deflation that has gripped Japan's economy since the 1990s.
Five years after Kuroda took the helm of the central bank, the economy is in good shape — the gross domestic product has expanded for eight quarters in a row for the longest growth run since the late 1980s bubble boom, and listed companies continue to post record profits. However, the 2 percent annual inflation target, which the central bank and the government set as a goal for busting deflation, remains nowhere closer to being achieved.
The reappointment of Kuroda for another five-year term — which, if approved by the Diet, will be the first time a BOJ chief has been given a second stint in 57 years — looks appropriate given the potential confusion over monetary policy that could arise from a change in the central bank's leadership. The unprecedented monetary stimulus program that Kuroda launched upon being tapped by Abe to the post in April 2013 will likely be maintained for now.