Japan’s government is intensifying its search for a successor to central bank governor Haruhiko Kuroda, a choice that will affect how soon the Bank of Japan (BOJ) could phase out ultra-loose monetary policy.
The Nikkei newspaper reported on Monday the government has sounded out BOJ Deputy Governor Masayoshi Amamiya as the next governor, citing anonymous government and ruling party sources.
Kuroda’s second five-year term ends in April. Below are key dates to watch:
BOJ LEADERSHIP RACE
Prime Minister Fumio Kishida will hand-pick nominees for the governor and deputy governor posts from a list crafted by his close aides and finance ministry officials.
The government is expected to present the nominees to parliament next week, sources have told Reuters, which is most likely to be approved as the ruling coalition holds a majority in both houses of parliament.
The nominees will then appear in both houses of parliament to testify their views on monetary policy.
Kuroda’s term ends on April 8, while those of his deputies Masayoshi Amamiya and Masazumi Wakatabe expire on March 19.
There is a slim chance Kuroda might step down early from his post, so that the new governor can assume the post together with the new deputies on March 20.
People seen as top candidates for the BOJ governor post include Amamiya, as well as former deputy governors Hiroshi Nakaso and Hirohide Yamaguchi.
BOJ RATE-SETTING MEETINGS
The final policy-setting meeting for Kuroda and his two deputies will be held on March 9-10.
The subsequent meeting will be held on April 27-28 under a new BOJ leadership. At the April meeting, the BOJ will issue for the first time its quarterly growth and inflation projections for fiscal 2025, which will offer clues on how quickly the central bank could move toward an exit from ultra-easy policy.
By the time the BOJ holds its April meeting, big firms would have agreed with unions on next year’s annual pay in “shunto” spring wage negotiations.
OTHER KEY EVENTS
Japan’s economic and inflation data will remain in the spotlight as the BOJ gauges the timing of an interest rate hike.
Core consumer inflation hit 4.0% in December, double the BOJ’s price target, as companies hike prices to pass on higher raw material costs to households. Analysts expect it to stay above the BOJ’s 2% target for several more months, before slowing due to recent declines in global commodity costs.
Consumer inflation data for February is due out on March 18.
In a positive sign for policymakers, data due out on Feb. 14 will likely show Japan’s economy returned to growth in the last quarter of 2022 as consumption made a delayed recovery from the COVID-19 pandemic’s wounds.
The new BOJ governor will be busy with international meetings. The first major one involving travel will likely to be the spring International Monetary Fund (IMF) meetings to be held in Washington D.C. on April 10-16.
Japan will also chair this year’s Group of Seven (G7) meeting of advanced economies, where inflation and monetary policy will likely be among key topics of debate.