Abe Taps Economist Sakurai to Replace BOJ Dissenter on Board

  • Sakurai, 70, will take board seat of 53-year-old Sayuri Shirai
  • Shirai opposed negative rates and is the only woman on board

The Abe administration nominated an economist with links to aides to the prime minister as a replacement for a Bank of Japan board member who in January opposed the adoption of negative interest rates.

Prime Minister Shinzo Abe opted against giving another term to Sayuri Shirai, 53, when her current one expires March 31. She was on the losing side of the BOJ’s 5-4 vote in January to implement a negative benchmark rate for the first time. She had voted with Governor Haruhiko Kuroda to expand asset purchases in 2013 and again in 2014.

Makoto Sakurai, 70, an international finance researcher, will take the job after he gets confirmation in parliament, where Abe’s ruling coalition has majorities in both houses.

The nomination to the central bank’s board, announced Friday, comes as its recently adopted negative-rate strategy generates controversy at home and abroad and as inflation remains far from the BOJ’s 2 percent target.

‘Kuroda Line’

“I think Sakurai is a great choice,” said Japan lawmaker Kozo Yamamoto, who has advised Abe in the past. “I think he will basically follow the Kuroda line” on the BOJ board, he said.

“I don’t think he’ll be pushing for more and more easing -- he’ll watch, and add easing if the timing” is right, Yamamoto added.

Sakurai co-authored a paper with one of Abe’s economics advisers, Koichi Hamada, and one other person in 1977, according to a list of Hamada’s publications on a Yale University website. The article was called “Low Interest Rates and Income Distribution” and was published in Contemporary Economics.

Given his past speeches and profile, Sakurai seems to be close to what Abe and Kuroda are seeking for their reflationary policy, said Daiju Aoki, a Japan economist at UBS Group.

Views Little Known

Sakurai, whose views on monetary policy are little known, graduated with a bachelor’s degree in economics from Chuo University in 1970 and started working at the Export-Import Bank of Japan in 1976, according to a government biography obtained by Bloomberg.
 
He was a researcher at Yale University’s Economic Growth Center in the early 1980s, and then was at the Ministry of Finance’s policy research institute. From 1992, he was head of the international finance research center at what is now the MS&AD Research Institute. In 2007, he founded Sakurai and Associates.

Sakurai could join the board for the April 27-28 policy meeting.

Gender Gap

The Bank of Japan lags behind other central banks in the representation of women on the board. Since the structure was changed in 1998, one of the nine seats has been filled by a woman, and Shirai was the third female member.

There are four women on the Federal Open Market Committee, including Chair Janet Yellen, and the Malaysian central bank has been led by a female governor since 2000.

The BOJ board also lacks youth, with a much higher proportion of members in their seventies than is the case for the Fed and the European Central Bank.

Abe will have an opportunity to further shape the board in June with former bank executive Koji Ishida’s term coming to an end. Kuroda was handpicked by Abe, along with the two deputy governors and two other board members.

Although Kuroda continues to show confidence that Japan will reach the inflation target, consumer prices are hovering near zero, with the governor mainly blaming that on the sharp decline in energy prices.

The BOJ surprised markets in January by adopting a negative rate strategy, aiming to drive yields down and stimulate lending and the economy. The move was intended to counter risks generated by volatile financial markets, falling oil prices and uncertainty over emerging nations like China, the bank said.

The policy has generated criticism and confusion, with lawmakers in Japan summoning Kuroda for questioning a record number of times in February and Eurogroup chief Jeroen Dijsselbloem expressing concern about negative rates at the Group of 20 meeting in Shanghai.

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