Japan’s Central Bank Close to Adding ‘Easy Money’ Seat

Bank of Japan Gov. Haruhiko Kuroda Press Conference
A Japanese national flag flies atop the Bank of Japan (BOJ) headquarters in Tokyo, Japan, on Tuesday, March 15, 2016. The BOJ refrained from bolstering its record monetary stimulus as policy makers gauge the impact of the negative interest-rate strategy they adopted in January. Photographer: Kiyoshi Ota/Bloomberg via Getty Images
Bloomberg Bloomberg via Getty Images

Japan’s lower house of parliament gave its approval on Tuesday for academic and reflationist Makoto Sakurai to join the Bank of Japan’s divided policy board, a move seen tipping the balance more in favor of Governor Haruhiko Kuroda’s push for radical stimulus.

Sakurai, a think tank executive, would replace Sayuri Shirai, a former International Monetary Fund economist who voted against the BOJ’s decision in January to adopt negative interest rates. Shirai’s five-year term ends on March 31.

Sakurai’s addition to the board and Shirai’s departure would ease pressure on Kuroda, who faced a 5-4 vote in January, when he pushed through a surprise decision to cut a bench mark interest rate below zero.

The government nominee looks certain to be approved by the upper house on Wednesday, given the ruling coalition’s solid majority in both chambers of parliament.

Sakurai’s first policy-setting meeting will be on April 27-28, when the central bank will issue a quarterly report of its long-term economic and price projections.

Etsuro Honda, a key economic advisor to Prime Minister Shinzo Abe, has said Sakurai would back Kuroda if the governor decides to ease again.


“Sakurai is an aggressive reflationist and he would be a powerful supporter for Kuroda,” Honda told Reuters this month.

“He has an unwavering conviction that deflation can be beaten by means of monetary policy.”

Sakurai has ties with Abe aides Yale University professor Koichi Hamada and ruling party lawmaker Kozo Yamamoto – both of whom are architects of Abe’s stimulus program and advocate bold monetary policy.

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