Japanese Prime Minister Fumio Kishida has announced that he will nominate a new Bank of Japan governor within the next month. Markets are currently evaluating whether the central bank will alter the ultra-low interest rate policy of the dovish Haruhiko Kuroda.
Kishida initially stated on a TV Tokyo program that he would determine Kuroda’s replacement based on the economic situation in April. However, when questioned, he admitted that the decision would likely be made in February, “considering parliament’s schedule”
Kuroda, whose five-year term expires on April 8, has adhered to policies designed to stimulate price increases and growth, despite the fact that inflation is at 41-year highs and double the BOJ’s objective, and despite the fact that other central banks have been raising interest rates.
On March 19, the mandates of Kuroda’s two deputies expire. Both branches of parliament must approve of the three nominations.
Wednesday, the BOJ maintained its ultra-easy policy, defying investors who have recently sought to breach the bank’s 10-year government bond yield ceiling. With even Kuroda sounding optimistic about wage increases, the likelihood that the BOJ will terminate its expansionist experiment this year is growing.
Last week’s test followed the BOJ’s unexpected decision in December to double the yield target band to 0.5% above or below zero.