Japanese Prime Minister Shinzo Abe’s administration nominated an economist with links to aides to the prime minister as a replacement for a Bank of Japan (BOJ) board member who in January opposed the adoption of negative interest rates.
Abe opted against giving another term to Sayuri Shirai, 53, when her current one expires March 31. She was on the losing side of the BOJ’s 5-4 vote in January to implement a negative benchmark rate for the first time.
She had voted with BOJ Governor Haruhiko Kuroda to expand asset purchases in 2013 and again in 2014.
Makoto Sakurai, an international finance researcher, will take the job after winning confirmation in parliament, where Abe’s ruling coalition has majorities in both houses.
The nomination to the central bank’s board, announced yesterday, comes as its recently adopted negative-rate strategy generates controversy at home and abroad and as inflation remains far from the BOJ’s 2 percent target.
Sakurai, 70, co-authored a paper with one of Abe’s economics advisers, Koichi Hamada, and one other person in 1977, according to a list of Hamada’s publications on a Yale University Web site.
The article was called “Low Interest Rates and Income Distribution” and was published in Contemporary Economics.
Given his past speeches and profile, Sakurai seems to be close to what Abe and Kuroda are seeking for their reflationary policy, UBS Group Japan economist Daiju Aoki said.
Sakurai, whose views on monetary policy are little known, graduated with a bachelor’s degree in economics from Chuo University in 1970 and started working at the Export-Import Bank of Japan in 1976, according to a government biography obtained by Bloomberg.
He was a researcher at Yale University’s Economic Growth Center in the early 1980s, and then was at the Japanese Ministry of Finance’s policy research institute. From 1992, he was head of the international finance research center at what is now the MS&AD Research Institute. In 2007, he founded Sakurai and Associates.
Sakurai could join the board for the April 27-28 policy meeting.
Abe will have an opportunity to further shape the board in June, with former bank executive Koji Ishida’s term coming to an end. Kuroda was handpicked by Abe, along with the two deputy governors and two other board members.
Although Kuroda continues to show confidence that Japan will reach the inflation target, consumer prices are hovering near zero, with the governor mainly blaming that on the sharp decline in energy prices.
The BOJ surprised markets in January by adopting a negative rate strategy, aiming to drive yields down and stimulate lending and the economy. The move was intended to counter risks generated by volatile financial markets, falling oil prices and uncertainty over emerging nations like China, the bank said.
The policy has generated criticism and confusion, with lawmakers in Japan summoning Kuroda for questioning a record number of times last month and Eurogroup President Jeroen Dijsselbloem expressing concern about negative rates at the G20 meeting in Shanghai last week.
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