TOKYO — The Japanese government said Tuesday that it would delay nominating a central bank governor by a week, fanning talk of friction between the prime minister and the finance minister over who should run a Bank of Japan charged with reigniting the economy.
Economics Minister Akira Amari said the government would not nominate the governor or the two deputy governors until after Prime Minister Shinzo Abe returned from a trip to the United States that runs from Thursday to Sunday.
Mr. Abe has demanded aggressive action from a new governor, who is scheduled to be appointed by the end of March, prompting expectations that he would favor a candidate willing to undertake radical policies to lift Japan out of years of deflation.
Some government officials are concerned, however, that a governor promoting radical policies could upset financial markets.
“There’s probably some disagreement between Aso and Abe,” said Hiroaki Muto, senior economist at Sumitomo Mitsui Asset Management, referring to Finance Minister Taro Aso.
Mr. Abe said Monday that he would make an announcement “soon.”
Mr. Amari, the economics minister, told a news conference after a cabinet meeting, “After Prime Minister Shinzo Abe returns, we will lay the groundwork to reach an agreement with opposition parties within this month.”
The approval of Parliament — including the upper house, where Mr. Abe lacks a majority, is needed by the government’s nominee.
The delay is also partly the result of a parliamentary rule, set by the governing and opposition parties five years ago, that once the name of a nominee is leaked to the news media, the candidate will be automatically disqualified. The rule makes it difficult to float names among different political groups to build a consensus.
Mr. Abe led the Liberal Democratic Party back to power in December with promises of aggressive monetary and fiscal stimulus to lift an economy that has stagnated for years. Japan is in its fourth recession since 2000.
His demands have caused the yen to slump more than 15 percent against the dollar since the election campaign in November, causing worries about competitive currency devaluations. The Nikkei 225-stock average has rallied more than 30 percent over the same period on hopes that the weaker currency would bolster exporters’ earnings.
The prime minister reiterated Monday that he wanted the new central bank governor to pursue bold monetary easing, in which the bank buys assets like government bonds to free up money in the private sector. The candidate will replace Masaaki Shirakawa, who is retiring at the end of a five-year term.
Mr. Abe’s push for looser monetary policy prompted the central bank in January to take its boldest action to date, doubling its inflation target to 2 percent and agreeing to an “open ended” asset-buying program, beginning next year.
Mr. Abe’s short list for the bank’s governor is said to include Haruhiko Kuroda, Japan’s former point man on currency, who now heads the Asian Development Bank; and Kazumasa Iwata, a former government economist and deputy governor of the Bank of Japan.
Mr. Kuroda has been a vocal critic of policies under Mr. Shirakawa, while Mr. Iwata has repeatedly called for the central bank to consider buying foreign bonds to curb the strength of the yen, a measure that Mr. Abe has also said should be an option.
Others say the leading candidate is Toshiro Muto, a former top official in the finance ministry and deputy central bank governor. Analysts say Mr. Muto would promote more aggressive policies than Mr. Shirakawa but refrain from the more radical measures advocated by some other candidates.
“I get the sense that Aso wants Toshiro Muto and that Abe prefers Kazumasa Iwata,” said Hiroaki Muto, the senior economist at Sumitomo Mitsui Asset Management. “Then there’s the matter of dealing with opposition parties. Either one or the other will be appointed B.O.J. governor. There could be some disappointment because at this point the only way to surprise investors is by taking unconventional policy steps.”
In the upper house of Parliament, Mr. Abe would need votes of the opposition Democratic Party of Japan, or a combination of votes from other smaller parties, to get a nominee’s approval.
Article source: http://www.nytimes.com/2013/02/20/business/global/japan-delays-naming-new-leader-for-central-bank.html?partner=rss&emc=rss
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