Japan’s biggest opposition party may oppose newly installed central bank governor Haruhiko Kuroda for a full five-year term that would begin next month, lawmaker Seiji Maehara said in an interview.
Parliament last week approved Kuroda’s appointment to serve the remainder of predecessor Masaaki Shirakawa’s term as head of the Bank of Japan (8301) from March 20 to April 8, with support from Maehara’s Democratic Party of Japan. Prime Minister Shinzo Abe’s government today renominated Kuroda, who must be confirmed to serve a complete term.
“We’ve given him a provisional license, but we haven’t yet decided whether to approve him fully,” Maehara, a former economy minister whose DPJ is the biggest party in the upper house, said today in an interview.
He called on Kuroda to show “flexibility” over the BOJ’s 2 percent inflation target, which Abe has advocated to overcome more than 15 years of falling prices. Maehara reiterated his party’s opposition to changing the law governing the central bank to allow the government to fire the governor.
A DPJ rejection of Kuroda, who gives his first press conference at 6 pm. today, risks further jeopardizing the party’s popularity after suffering a landslide loss to Abe’s Liberal Democratic Party in December. Pledges to revive the economy with aggressive monetary and fiscal stimulus have boosted Abe’s popularity ahead of upper house elections in July.
Maehara said concerns that unlimited monetary easing could fuel inflation justify greater scrutiny of the new central bank governor, even at the risk of leaving the position vacant.
“It would be in the national interest to vote against someone who puts inflation ahead of everything else, which could lead to a collapse of the economy,” he said.
The central bank in January set a 2 percent inflation target, which Kuroda has said he aims to achieve in two years. Maehara said the target should not be fixed.
DPJ policy chief Mitsuru Sakurai last week said he wanted to observe the results of Kuroda’s first BOJ policy meeting on April 3-4 before the party decides whether to support him.
As party policy chief under Prime Minister Yoshihiko Noda, Maehara was a proponent of further monetary easing, calling on the BOJ to consider buying foreign bonds.
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