Iwata’s Confirmation to BOJ Board in Jeopardy as DPJ OpposesTakashi Hirokawa and Isabel Reynolds
Kikuo Iwata, one of Prime Minister Shinzo Abe’s nominees for Bank of Japan deputy governor, may struggle to win enough votes for confirmation after the largest opposition party rejected his candidacy.
The Democratic Party of Japan will vote against Iwata, while endorsing Haruhiko Kuroda as central bank governor and Hiroshi Nakaso as deputy governor, DPJ policy chief Mitsuru Sakurai said today in Tokyo. Nakaso and Iwata completed their confirmation hearings today after Kuroda in his testimony yesterday called for more stimulus to beat deflation.
Abe needs opposition support to get his nominees through the upper house of parliament, where his Liberal Democratic Party-led coalition lacks a majority. Iwata, 70, who advocates greater government oversight of the central bank, can still win confirmation should a sufficient number of DPJ lawmakers break with the party line or smaller parties vote for him.
“It could be a close call depending on whether the DPJ takes a unified stance against Mr. Iwata or allows individual members to vote as they wish,” Tokyo-based Barclays Plc analysts Kyohei Morita, Yuichiro Nagai and James Barber wrote in a note to clients today.
While supporting Kuroda this time, the DPJ reserves the right to oppose him once he is re-nominated in April after finishing the remainder of outgoing Governor Masaaki Shirakawa’s term, Sakurai said. Shirakawa is stepping down March 19, before his term was to end on April 8.
The yen strengthened on the DPJ announcement, and was trading at 95.95 per dollar at 6:41 p.m. in Tokyo.
The DPJ has 87 legislators in the upper house, compared with the LDP and coalition member New Komeito’s combined 102. Six of the chamber’s 242 seats are vacant, so 118 votes are required for confirmation as the speaker doesn’t vote, according to parliament’s secretarial office.
The Your Party, which has 12 upper house lawmakers, and the Japan Restoration Party, which has three, will announce their stance on the nominees tomorrow.
Iwata, a professor at Tokyo’s Gakushuin University, criticized the BOJ for insufficient stimulus as far back as the 1990s, and has called for revising the law governing the central bank to give the government more say in setting policy goals.
“His views on changing the BOJ law, especially allowing for firing people, is a complete violation of the BOJ’s independence,” Sakurai said. “Iwata is unacceptable as deputy governor.”
Iwata today said in parliament that the central bank can end deflation solely through buying longer-term government debt, adding that “decisive” monetary stimulus is needed to achieve a 2 percent inflation target.
The central bank currently buys government bonds with maturities of up to three years through a fund targeted to reach 76 trillion yen ($790 billion) by the end of this year.