Japan PM to nominate BOJ chief soon, Muto seen lead candidate
By Leika Kihara and Yoshifumi Takemoto
TOKYO (Reuters) - Former top financial bureaucrat Toshiro Muto is the leading candidate to become Japan's next central bank governor, suggesting Prime Minister Shinzo Abe's hopes for a more radical policymaker are fading.
Abe will pick a nominee as early as this week, sources close to the process told Reuters. The prime minister said he would make an announcement "soon" on a nominee, who would need to be confirmed by both houses of parliament.
Abe led his party back to power in December with promises of aggressive monetary and fiscal stimulus to lift an economy dogged for years by deflation. He reiterated on Monday that he wanted the new BOJ governor to pursue bold monetary easing.
"I'd like the new BOJ governor to be someone who has the strong determination and ability to pull Japan out of deflation," he told parliament, suggesting that revising a law guaranteeing the central bank's independence was possible if the authority failed to act aggressively enough.
He said buying foreign bonds, considered an extreme measure by many officials, may be one policy option for the BOJ.
"I'd like to reflect the government's determination (of beating deflation) through the nomination, which is likely to be made soon," Abe said.
His push for looser monetary policy prompted the central bank in January to take its boldest action to date, doubling its inflation target to 2 percent and agreeing to an "open ended" asset buying program from 2014.
But some policymakers and government officials worry that radical measures could unsettle financial markets and add to Japan's debt burden, already the highest among industrialized countries. Continued...