Kishida vows to debate government, BOJ roles with new central bank head

JAPANESE Prime Minister Fumio Kishida said on Sunday (Jan 8) that the government and the central bank must discuss their relationship with each other in guiding economic policy, when a new Bank of Japan (BOJ) governor is chosen in April.

Asked what kind of person he would choose as next BOJ governor, Kishida said it will be someone “best suited for the job” when incumbent Haruhiko Kuroda’s term ends in April.

“The government and the BOJ must work closely together, but also each play its own role” in achieving price stability and higher wage growth, Kishida told a television programme.

“Under the new BOJ governor, we must discuss the relationship between the government and the BOJ,” said Kishida, who has authority to choose the next central bank head.

Markets are rife with speculation the BOJ could move further to phase out Kuroda’s massive stimulus by tweaking its yield control policy under a new central bank governor.

“In guiding monetary policy, policymakers must have a view on the outlook for the economy. There needs to be careful communication and dialogue with markets,” Kishida said, when asked whether the BOJ needs to tweak it ultra-loose policy.

Kishida also noted that careful explanation and communication with markets would be part of consideration on monetary policy, when asked about possible future changes in the BOJ’s ultra-loose policy. 

His comments in a live interview with public broadcaster NHK came after BOJ governor Kuroda last month shocked markets by saying he would allow Japan’s 10-year bond yields to rise to about 0.5 per cent, double the previous upper limit of 0.25 per cent. 

“We need a firm grasp on the outlook,” Kishida said in response to a question about future changes in policy. “We will consider the situation, including careful explanation and communication with markets.” 

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He said the basic aim remained to achieve economic growth that would bring about structural rises in wages and stable prices. Last week data showed that inflation-adjusted pay had fallen by its biggest margin since 2014. 

Asked about the timing of the next general election, Kishida said he would do what needs to be done and go to the people at an appropriate time. REUTERS, BLOOMBERG