Abe Stops Short of Saying Whether He’ll Reappoint KurodaBy and
Prime minister praises Kuroda’s push to reach inflation goal
Kuroda is the top contender to lead the Bank of Japan again
Prime Minister Shinzo Abe praised the Bank of Japan’s efforts to reach its inflation target, but stopped short of saying whether he’d reappoint Governor Haruhiko Kuroda to lead the central bank when his term expires next year.
Speaking to reporters hours after being reappointed as prime minister by parliament, Abe said "the slate is completely blank" on his choice for governor. "We haven’t yet reached the 2 percent price stability target, but we expect the Bank of Japan to continue to make efforts to achieve it," he said in Tokyo on Wednesday evening.
Kuroda is the top contender by a wide margin to lead the Bank of Japan again when his five-year term comes to an end in April, according to an Oct. 23-24 Bloomberg survey that showed his lead firming up since an earlier poll conducted in August.
"I have faith in Governor Kuroda’s abilities and I leave monetary policy up to him," Abe said. "By strengthening the cooperation between the government and the Bank of Japan, we have been able to create a situation that is not deflation within a short time."
Abe’s election win last month has raised expectations that the central bank’s current policy stance will continue, making any turn toward the exit even trickier, according to former board member Sayuri Shirai. The BOJ is under little pressure to take additional action even though inflation is well below its target. Japan’s economy is on track for the longest expansion in 16 years, and the labor market is the tightest in a generation.
The nine-member board maintained its view this week that its 2 percent target is likely to be met around the fiscal year that starts in April 2019. The BOJ’s key inflation gauge, which strips out fresh food, rose 0.7 percent in September.
Kuroda has stressed the importance of continuing monetary easing even as the BOJ lags behind its counterparts in turning toward policy normalization. The European Central Bank unveiled a plan to reduce bond purchases last week and investors see more than an 80 percent chance of another rate hike by the Federal Reserve in December.
President Donald Trump plans to nominate Federal Reserve Governor Jerome Powell to the top job at the U.S. central bank, the Wall Street Journal reported, citing a person familiar with the matter. On Wednesday, Fed officials reinforced expectations for a December interest-rate increase by subtly upgrading their assessment of the U.S. economy.
At his press conference, Abe also said he’d order his cabinet to compile an extra budget by the end of the year.