Bank of Japan Deputy Governor Masayoshi Amamiya hinted at no need for a major shift in monetary easing for now, in comments delivered just days before the announcement of Prime Minister Fumio Kishida’s pick for new central bank chief.
(Bloomberg) — Bank of Japan Deputy Governor Masayoshi Amamiya hinted at no need for a major shift in monetary easing for now, in comments delivered just days before the announcement of Prime Minister Fumio Kishida’s pick for new central bank chief.
“I don’t think there is a need for further adjustments for more flexibility at this stage,” Amamiya said in response to questions in parliament Friday, referring to the BOJ’s yield curve control program. Amamiya is seen by economists as the leading contender to replace outgoing Governor Haruhiko Kuroda in April.
Earlier Friday, Japan’s lawmakers said Kishida will nominate the new governor next Tuesday.
Amamiya is seen by strategists and economists as the closest figure to a continuity candidate among the main contenders. His comments on Friday will be closely scrutinized by market players trying to assess whether a BOJ governed by Amamiya would look to adjust policy or move away from stimulus.
The deputy governor said some improvement had been seen in reducing distortion in the yield curve following December tweaks to the program. “It’s important to watch how those improvement will go,” he added.
“It’s appropriate to maintain current monetary easing in principle,” Amamiya said. “There is still distance to our stable and sustainable inflation target.”
The remarks suggested Amamiya was largely in lockstep with Kuroda, though some of the language used also suggested he may have hedged to leave himself room for maneuver.
He said there was no need for any more adjustments to YCC “at this stage” and that pursing stimulus to achieve 2% inflation was still appropriate “in principle.”
The other main candidate is former Deputy Governor Hiroshi Nakaso, who is seen as a touch more hawkish than Amamiya. Still, Nakaso also has a long track record at the central bank and has worked under Kuroda. That puts him in a good position to ensure a relatively smooth transition, too.
Hirohide Yamaguchi, a former deputy for Kuroda’s predecessor, has also been mentioned in economist polls of likely candidates. Japan’s ruling party members see the possibility of division within the party if Kishida chooses Yamaguchi, who is considered much more hawkish than the other two.
A local media reported the government has approached Amamiya to become governor earlier this week. Government officials denied the report on Monday by saying the selection process isn’t over yet.
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