The government presented to the Diet on Friday a proposal to reappoint Haruhiko Kuroda as Bank of Japan governor, ahead of the end of his term on April 8.
The government also submitted to the Rules and Administration committees of both Diet chambers its nominations for Bank of Japan Executive Director Masayoshi Amamiya, 62, and Waseda University Prof. Masazumi Wakatabe, 52, to be central bank deputies. The terms of the incumbent deputies will end March 19.
The committees will soon hold hearings in which the nominees will be questioned, with all three expected to receive Diet approval.
Kuroda assumed his post in March 2013 and will stay on until April 2023 if reappointed. He would be the first Bank of Japan governor to be reappointed since Masamichi Yamagiwa served two terms through 1964. Prime Minister Shinzo Abe intends to maintain Kuroda's policy line, which has been supportive of the Abenomics economic policy package. He also plans to clarify his stance on ending deflation, the biggest goal of his Cabinet.
The reappointment of the 73-year-old Kuroda, who has moved in lockstep with the Abe Cabinet, had been widely expected by markets. Many have welcomed the move, because replacing Kuroda would likely shake the markets, which have recently been stricken by a global downturn in stock prices. "The reappointment is reasonable," a market source said.
The pair nominated to be deputy governors have similar monetary views to Kuroda's. Amamiya has worked with Kuroda as a board member after serving various posts at the Bank of Japan, including director general of the Monetary Affairs Department, which devises monetary policy measures. Wakatabe is known as a "reflationist" economist who favors the use of proactive monetary easing measures to boost growth.
After becoming central bank chief, Kuroda is said to have contributed to increases in stock prices and corporate earnings through what has been called "different-dimension monetary relaxation." Such measures entail expanding purchases of government bonds from financial institutions as a means of injecting massive amounts of capital into the market.
On the other hand, Kuroda initially proposed achieving 2 percent inflation "within about two years" after assuming his role as governor. The timeline for achieving this goal has been moved back six times. He currently aims to hit the target in fiscal 2019, but there are minimal prospects for doing so.
Some observers have voiced concern about potential future damage to Japan's economy as a result of implementing large-scale easing measures over a long period of time. Opposition parties have ramped up their criticism of Abenomics, saying the program excessively emphasizes monetary measures.
Kuroda is expected to be asked about concrete steps for ending deflation and how the economy should be managed in the long term at the hearings to be held soon by both Diet chambers.
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