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Japan's lower house approves reflationist Sakurai for BOJ board

Tuesday, March 22, 2016 - 13:45

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Japan's lower house of parliament gave its approval on Tuesday for academic and reflationist Makoto Sakurai to join the Bank of Japan's divided policy board.

[TOKYO] Japan's lower house of parliament gave its approval on Tuesday for academic and reflationist Makoto Sakurai to join the Bank of Japan's divided policy board, a move seen as tipping the balance more in favour of Governor Haruhiko Kuroda's push for radical stimulus.

Mr Sakurai, a think tank executive, would replace Sayuri Shirai, a former International Monetary Fund economist who voted against the BOJ's decision in January to adopt negative interest rates. Mr Shirai's five-year term ends on March 31.

Mr Sakurai's addition to the board and Shirai's departure would ease pressure on Mr Kuroda, who faced a 5-4 vote in January, when he pushed through a surprise decision to cut a bench mark interest rate below zero.

"Kuroda has now likely secured six votes and won't have to worry about his suggestions scraping through on a 5-to-4 vote,"said Takafumi Yamawaki, chief bond strategist at JP Morgan Securities in Tokyo. "BOJ policy will likely move forward with Kuroda's opinion at the centre. Board members who can oppose the governor are decreasing," he said.

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The government nominee looks certain to be approved by the upper house on Wednesday, given the ruling coalition's solid majority in both chambers of parliament.

Mr Sakurai's first policy-setting meeting will be on April 27-28, when the central bank will issue a quarterly report of its long-term economic and price projections.

Etsuro Honda, a key economic adviser to Prime Minister Shinzo Abe, has said Mr Sakurai would back Kuroda if the governor decides to ease again. "Mr Sakurai is an aggressive reflationist and he would be a powerful supporter for Kuroda," Mr Honda told Reuters this month. "He has an unwavering conviction that deflation can be beaten by means of monetary policy." Mr Sakurai has ties with Abe aides Yale University professor Koichi Hamada and ruling party lawmaker Kozo Yamamoto - both of whom are architects of Mr Abe's stimulus programme and advocate bold monetary policy.

REUTERS

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