Japan lower house approves reflationist Harada for BOJ board

Published Tue, Feb 24, 2015 · 07:32 AM

[TOKYO] Japan's lower house of parliament approved on Tuesday an advocate of aggressive monetary easing to join the central bank's divided policy board, a move seen supportive of Governor Haruhiko Kuroda's push for radical stimulus.

Yutaka Harada, a 64-year-old Waseda University professor, will replace Ryuzo Miyao, also an academic, whose five-year term ends on March 25. The upper house is expected to approve the government's nomination as early as Wednesday, given the solid majority the ruling coalition holds in both chambers.

Mr Miyao swung the board narrowly in favour of October's surprise monetary easing that was decided by a 5-4 vote. The close vote has given greater significance to the board's composition, as it suggested the difficulty Mr Kuroda might face should he want to ease further.

Mr Harada, who wrote a book with BOJ deputy governor Kikuo Iwata on how bold monetary easing can beat deflation, may give Mr Kuroda a stronger grip on the divided board, analysts say.

However, Mr Harada told Reuters in January that the BOJ does not necessarily need to persist with its 2 percent inflation target, a view that may complicate debate within the board.

The focus of monetary policy should be on stimulating the economy rather than achieving an inflation target, which should be considered only as a means for reflating growth, Mr Harada said. "I think it's okay even if the BOJ doesn't achieve 2 per cent inflation in fiscal 2015. It's important, instead, to guide policy so that the economy can continue to grow around 2 per cent." For now, Mr Harada's appointment is unlikely to trigger an immediate shift in policy. Last week Mr Kuroda said that he saw no current need to expand monetary stimulus, but that the bank would determinedly ease policy further if his inflation plan was disrupted by risks.


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