Bank of Japan Selects Shirakawa as Interim Governor
The Bank of Japan said Masaaki Shirakawa will act as interim governor, filling a vacancy left by Toshihiko Fukui whose term ends today, following a dispute between the government and the opposition.
“Mr. Shirakawa will take up the role of acting governor,'' Fukui said at a press conference in Tokyo to mark the end of his term. Board member Kiyohiko Nishimura, who won backing as one of the bank's deputy governors from parliament today, will take on the role should anything happen to Shirakawa, Fukui said.
Shirakawa, 58, will be on standby to prevent the spread of the credit freeze that prompted the U.S. Federal Reserve to take emergency measures this week to avert a financial market meltdown. He'll also preside over Japan's monetary policy as the longest economic expansion in 60 years slows and inflation accelerates.
“As long as the central bank has Shirakawa as an acting governor, there won't be any concern about monetary policy,'' said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management. “He has monetary policy experience.''
Naming an interim governor became necessary after Japan's upper house today voted against Koji Tanami, 68, to head the bank after last week rejecting Toshiro Muto, 64, who like Tanami was formerly the Finance Ministry's top bureaucrat.
Policy Experience
The DPJ cited concern the appointments would undermine the bank's independence from the finance ministry. The rejection extends the political wrangling over the job that's festered since the DPJ won control of the upper house last July.
“I would nominate Shirakawa if I were Prime Minister Fukuda,'' said Masamichi Adachi, a senior economist of JPMorgan in Tokyo and a former Bank of Japan official. “He will have no problem in handling monetary policy and leading the board members.''
The yield on the benchmark 10-year bond fell 5.5 basis points to 1.265 percent as of 6:28 p.m. in Tokyo on speculation the Bank of Japan may cut interest rates this year to bolster economic growth.
Goldman Sachs Group Inc. today predicted the central bank would cut interest rates by 25 basis points from 0.5 percent, the lowest among major economies, as soon as next month no fax payday advances no checking account payday advance.
As a former BOJ executive director, Shirakawa supervised policy when the bank stopped injecting extra cash into the economy to overcome deflation, known as quantitative easing, and raised the overnight borrowing rate from near zero two years ago.
He earned a master's degree in economics from the University of Chicago and worked at the central bank's New York office between 1994 and 1995.
Overseas Experience
Shirakawa is capable of representing Japan well at international meetings and communicating with other countries' central bankers, said Hiromichi Shirakawa, a former Bank of Japan official and now chief economist at Credit Suisse Group Inc. Credit Suisse's Shirakawa isn't related to the interim governor.
In his March 11 parliamentary testimony, Shirakawa said the central bank should pay attention to mid- and long-term risks to the economy.
“If interest rates continue to be kept low for a long time, deviating from the economy's temperature, they could end up hampering stable development of the economy and finances,'' he said.
He added that the outlook for Japan's economy is “full of uncertainties'' because U.S. economic growth is slowing and rising costs are hurting profits and households. The central bank must carefully examine data, he said.
Corporate Profits
Japan's government today lowered its assessment of the economy for the second consecutive month, citing deteriorating corporate profits.
Investors see a 71 percent chance the central bank will cut rates by December, according to JPMorgan Chase & Co. calculations. They see an 11 percent chance of rates being cut by April.
Fukui, 72, took the central bank's top position on March 20, 2003, the day Iraq war broke out. He ended the bank's deflation- fighting policy of injecting extra cash into the economy in March 2006. The bank increased the benchmark rate to 0.25 percent in July 2006 and doubled it in February last year.
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