Kuroda Gets BOJ Monetary-Policy Fixer as Amamiya ReturnsToru Fujioka
Incoming Bank of Japan Governor Haruhiko Kuroda will have a veteran of quantitative easing as his top policy planner, after Masayoshi Amamiya was brought back from running the bank’s Osaka branch.
Amamiya, who led the monetary affairs department for six years before being sent to Osaka in May, got his old job back as one of six executive directors, according to a BOJ statement in Tokyo yesterday. The veteran central banker did a stint at the Finance Ministry earlier in his career, an experience he may tap as the government and BOJ step up policy coordination.
The central bank official, 57, was at the helm of the department that draws up policy options when the BOJ adopted a goal of 1 percent inflation and surprised forecasters by injecting 10 trillion yen of stimulus in February 2012. Now, his return gives him a chance to plot strategy as Kuroda attempts to corral the nine-member board behind more easing.
“Amamiya is well respected inside the BOJ because he is good at finding the middle ground,” said Takahiro Sekido, Japan strategist in Tokyo at Bank of Tokyo-Mitsubishi UFJ Ltd., who worked at the central bank for 14 years, until 2011. “He will keep Kuroda happy by offering easing options, while he will keep the new regime from crossing the line.”
The return of Amamiya after less than a year as head of the Osaka branch breaks with typical tenures in the job. His dispatching to Osaka, the commercial center of western Japan and home of Panasonic Corp., months after the February stimulus surprise was also a split with regular personnel announcements traditionally being unveiled in early July.
In his final press briefing today, outgoing governor Masaaki Shirakawa warned that merely expanding the monetary base won’t end deflation and said it’s dangerous for central banks to try to control market movements.
The departing BOJ chief, who repeatedly warned against the danger of asset bubbles stemming from excess stimulus, told reporters that his five years at the helm of the bank had been “extreme” and said he wouldn’t want to take up such a role again.
The new BOJ leadership team starts tomorrow, according to a government statement.
Shigeki Kushida takes over in Osaka after overseeing the Nagoya branch, the BOJ said yesterday. Kazuo Momma, whose job Amamiya is retaking, becomes deputy chief of international affairs -- the outgoing executive director for the bureau is Hiroshi Nakaso, who shifts to deputy governor this week.
Kuroda, 68, who has been Asian Development Bank president since 2005 and previously served as vice finance minister in charge of currency policy, was confirmed for his new post three days ago. Analysts at banks from JPMorgan Chase & Co to Barclays Plc expect the BOJ to add stimulus as soon as the next policy meeting on April 3-4.
“The BOJ is aware that it needs to change not only its mindset toward monetary easing, but also its personnel,” said Hiromichi Shirakawa, chief Japan economist at Credit Suisse Group AG in Tokyo and a former BOJ official who isn’t related to the governor. “This signifies the end of the Shirakawa era.”
Kuroda hasn’t publicly commented on any plans to change personnel. At both the Finance Ministry and the ADB he found roles for Masahiro Kawai, who co-wrote an opinion piece with him in 2002 calling for an inflation target at Japan’s central bank. Kawai is currently dean of the Tokyo-based Asian Development Bank Institute.
Along with Nakaso, who told lawmakers last week he didn’t see a divergence in views on policy between himself and Kuroda, academic Kikuo Iwata is poised to join the central bank as a deputy governor this week.
Amamiya was promoted to executive director of monetary affairs in 2010, when the BOJ set up its current asset-purchase program with an initial 5 trillion yen. The fund became the main policy tool, with the benchmark interest rate near zero, as the bank sought to revive growth in the world’s third-largest economy. The program is now targeted to reach 76 trillion yen ($796 billion).
He was also in place when the board adopted a goal of 1 percent inflation last year. Under pressure from Prime Minister Shinzo Abe, who swept to victory in elections in December on a platform of reflation, the BOJ two months ago embraced a target of 2 percent gains in consumer prices.
Expectations of greater easing have sent the yen about 16 percent lower against the dollar since mid-November and propelled stocks to a 4 1/2 year high. The currency was 0.3 percent weaker at 95.47 per dollar as of 5:00 p.m. in Tokyo, while the Nikkei 225 Stock Average closed 2 percent higher.
Toyota Motor Corp. has climbed 23 percent this year as the exchange rate became more competitive for its exports. The company agreed last week to pay its employees in Japan the biggest bonus in five years, anticipating its net income to triple this fiscal year.
Kuroda, who said last week he wants to discuss easing “soon,” has repeatedly said that monetary policy alone can end deflation. He signaled to lawmakers he would expand bond purchases, saying that a self-imposed rule limiting the scale of buying isn’t something adopted by other central banks.
The BOJ has pledged to keep the value of its bond holdings below the amount of cash in circulation, excluding the asset-purchase fund which it counts separately.
In parliamentary testimony in August 2011, Amamiya played down the importance of the rule. The BOJ is similar to other global central banks, he said, once bond purchases through the asset-purchase program are taken into account.
Policy options under the new BOJ leadership include accelerating bond-purchase plans and extending the maturity of debt that the central bank buys, Kyohei Morita, chief economist at Barclays in Tokyo, said in a research report dated March 15.