Aso praises Bank of Japan chief, raises expectations of reappointment

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Japanese Finance Minister Taro Aso hailed on Thursday the achievements of Bank of Japan (BOJ) Governor Haruhiko Kuroda, raising expectations that the central bank chief will be reappointed when his five-year term ends in April.

Kuroda embarked on an unprecedented burst of monetary stimulus since Prime Minister Shinzo Abe handpicked him a few months after he swept to power in December 2012, pledging to pull Japan out of nearly two decades of stagnation and deflation.

Since then the yen has weakened as a result of monetary easing, helping boost exports and employment, Aso said.

Aso echoed the view Abe who said on Wednesday that he had full confidence in Kuroda’s ability as central bank governor.

Japanese Finance Minister Taro Aso /Reuters Photo

The comments by both Aso and the premier backed market expectations that Kuroda is likely to be reappointed even though the premier said that nothing has been decided.

Aso also made no mention of who should succeed Kuroda.

“He has overhauled the Bank of Japan’s monetary policy and eased policy, as a result the yen has fallen from around 80 yen to some 113 yen, which has improved export conditions for Japanese firms,” Aso told reporters after a cabinet meeting when asked about Kuroda.

That has helped companies earn record profits and improve employment and household income conditions, he said.

“Coordination between fiscal and monetary policies has worked well.”

VCG Photo

Abe also instructed Aso to put a decisive end to deflation, revive the economy and tackle fiscal consolidation, the finance minister said, after the premier was re-elected on Wednesday following his ruling bloc’s election win last month.

Kuroda’s reappointment would mean his signature stimulus program will stay for the time being even as US and European central banks head towards normalizing unconventional monetary policy.

The world’s third-largest economy is gradually recovering but prices are lagging behind, hovering far below the two percent inflation goal.

The central bank left monetary policy steady on Tuesday while a board newcomer called for clearer commitment to ramp up stimulus if necessary, potentially complicating future efforts by the BOJ to dial back its massive monetary stimulus.

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Source(s): Reuters