Japan's Abe to Propose BOJ Board Member Candidate

        TOKYO--Japanese Prime Minister Shinzo Abe has decided to nominate a proponent of aggressive monetary stimulus to succeed a Bank of Japan policy board member whose term ends next month, a government adviser said Tuesday.
        Mr. Abe's administration is preparing to submit the candidate's nomination to parliament Wednesday, kicking off a weekslong process to gain approval from both the upper and lower chambers of the Diet, people familiar with the matter say.
        In an interview with The Wall Street Journal, the government adviser declined to disclose the name of the candidate, but he added that there is "no doubt" that the person picked by Mr. Abe will support BOJ Gov. Haruhiko Kuroda's aggressive easing program aimed at generating 2% inflation.
        "I believe that this person will be able to win the confidence of financial experts in news organizations and those who are known as "BOJ watchers" " in the markets, the adviser said.
        A report in the Wednesday edition of the Nikkei business daily said the government was set to pick Yutaka Harada, a Waseda University professor and proponent of reflationary monetary policies as the candidate to replace Ryuzo Miyao, one of the central bank's nine policy-setting board members. Mr. Miyao's five-year term ends March 25.
        Mr. Harada declined to comment on whether he was lined up to be the candidate when asked by the Journal on Tuesday.
        Investors are closely watching the board-member rotation, given how it could affect the way the central bank receives Mr. Abe's economic policies, which are better known as "Abenomics."
        Mr. Harada was previously a bureaucrat in the predecessor to the Cabinet Office. He edited and contributed to a book on reviving the economy through reflation together with BOJ Deputy Gov. Kikuo Iwata and Koichi Hamada, an economic adviser to Mr. Abe.
        In a panel discussion organized by the Journal in December, Mr. Harada defended Abenomics, saying the labor market was improving and would soon bring about an increase in full-time employment.
        The BOJ's easing policy is the first pillar of Abenomics aimed at defeating more than a decade of deflation by flooding the banking sector and the economy with cash. By adding a sympathizer to the board, Mr. Abe could make it easier for Mr. Kuroda to expand easing measures in the future if that becomes necessary.
        Mr. Kuroda led the board to increase the central bank's annual asset purchases by as much as 33% to Yen80 trillion ($680 billion) on Oct. 31, but only by a razor-thin 5-4 vote. The split decision has raised speculation that the next time Mr. Kuroda wants to undertake such bold steps he could have more trouble convincing the board even if he saw the need for additional action. Mr. Miyao, a former university professor, voted in favor of the October easing but only reluctantly, the adviser suggested.
        Japan's inflation rate, as gauged by the core consumer-price index, fell to 0.5% in December amid falling global oil prices--well below April's peak of 1.5%. The BOJ has effectively pushed back its time frame to achieve its 2% inflation goal to the middle of 2016 from its initial goal of this year, but a majority of private economists still expect that the central bank will ease policy further through the course of this year.
        The government has no intention of abandoning its goal of generating 2% price growth, although it is up to the BOJ to decide when it should reach the target, the government adviser said.
        The nominee's name may be disclosed shortly after a meeting of a lower-house parliamentary committee meeting slated for Wednesday morning in Tokyo.
        The nominee is likely to pass parliament with ease because Mr. Abe's ruling Liberal Democratic Party and its junior coalition partner, New Komeito, have both chambers under their control.
        Write to Takashi Nakamichi at takashi.nakamichi@wsj.com and Tatsuo Ito at tatsuo.ito@wsj.com
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        (END) Dow Jones Newswires

        February 03, 2015 19:50 ET (00:50 GMT)

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