Japan seen nominating "deflation basher" as BOJ head: sources

Mon Feb 25, 2013 7:03am EST
 

By Leika Kihara and Yuko Yoshikawa

TOKYO (Reuters) - Japan's prime minister is likely to nominate an advocate of aggressive monetary easing - Asian Development Bank President Haruhiko Kuroda - as the next central bank governor to step up his fight to finally rid the country of deflation.

Shinzo Abe won a big election victory in December promising to revive the fortunes of an economy stuck in the doldrums for most of the past two decades. He has repeatedly called for a more aggressive central bank willing to take radical steps.

The yen fell on the nomination news to a 33-month low and the yield on five-year government bonds hit a record low as markets moved to factor in bolder monetary policy.

"Kuroda is a fan of a weaker yen and of deflation bashing," said Kit Juckes, a strategist at Societe Generale in London.

Sources said the government is likely to nominate Kuroda and two deputies this week for parliamentary approval.

It is also lining up Kikuo Iwata, an academic who advocates unorthodox monetary easing steps, and BOJ Executive Director Hiroshi Nakaso, who now oversees the central bank's international operations, as deputy governors, a source familiar with the process said. Iwata told reporters he had been offered the job and he would accept it.

Like the U.S. Federal Reserve, the Bank of Japan has cut interest rates close to zero. Since then it has adopted unorthodox measures to inject cash into the economy, currently in its fourth recession since 2000, to try to stimulate growth.

But Kuroda has long criticized the BOJ as too slow to expand stimulus, and is expected to push for more radical efforts to achieve a 2 percent inflation target set in January.   Continued...

 
Asian Development Bank President Haruhiko Kuroda speaks during a group interview in Tokyo February 11, 2013. REUTERS/Toru Hanai