Haruhiko Kuroda was endorsed by the lower house of parliament to become Bank of Japan (8301) governor, clearing the first hurdle in Prime Minister Shinzo Abe’s plan to install a central bank leadership in favor of more easing.
Lawmakers in the chamber, which is dominated by the ruling coalition, today also approved Kikuo Iwata and Hiroshi Nakaso for two deputy governor posts,
Abe now needs to get his nominations through an upper house vote tomorrow, where his Liberal Democratic Party lacks a majority. The largest opposition party’s pledge to reject Iwata, who has advocated greater monetary stimulus since the 1990s, while backing Kuroda, adds to the risk of a BOJ board where there is less support for boosting asset purchases.
“The first test is cleared without a hitch,” said Akito Fukunaga, chief rates strategist at RBS Securities Japan Ltd. in Tokyo, a unit of Royal Bank of Scotland Group Plc. “The focus is now on the upper house: If all three nominees are approved, that will prepare the ground for speedier monetary stimulus.”
The Nikkei 255 Stock Average advanced after the vote, gaining 0.7 percent at 1:22 p.m in Tokyo. The yen pared gains, rising 0.2 percent to 95.94 per dollar after earlier touching 95.45.
Fukunaga at RBS, who expects all three candidates to win approval in the upper house, said that Kuroda may call an emergency board meeting before the next scheduled gathering on April 3-4.
Smaller opposition parties yesterday said they would back Iwata in the upper house, putting him above the threshold needed to win confirmation in the chamber, provided lawmakers follow their party’s recommendations.
Iwata, a professor at Tokyo’s Gakushuin University, has called for revising the law governing the central bank to give the government more say in setting policy goals.
While supporting Kuroda this time, the opposition Democratic Party of Japan reserves the right to vote against him once he is re-nominated next month after completing the term of outgoing Governor Masaaki Shirakawa, DPJ policy chief Mitsuru Sakurai said this week. Shirakawa steps down March 19, before his term was due to end on April 8.
Kuroda must be confirmed again to serve for the regular five-year period beginning April 9, according to the BOJ.
The second vote is a technicality and the DPJ is unlikely to reverse its support for Kuroda, according to Masamichi Adachi, senior economist at JPMorgan Chase & Co. in Tokyo, and Robert Feldman, head of Japan economic research at Morgan Stanley MUFG Securities Co. in Tokyo.
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