Japan reappoints Kuroda as BoJ chief

TOKYO: Japan reappointed central bank chief Haruhiko Kuroda for another term on Friday, and chose an advocate of bolder monetary easing as one of his deputies in a strong signal to investors that policymakers are in no rush to turn off a sweeping stimulus programme.

The selection of the new BOJ leadership comes amid heightened anxiety in Japanese and global financial markets, fueled partly by speculation over how quickly major central banks will wind down their crisis-era policies.

In a widely expected move, the government nominated Kuroda, a 73-year-old former finance ministry bureaucrat, to serve another five-year term when the current one ends in April.

That would make him the longest serving BOJ head in half a century, a sign of premier Shinzo Abe´s confidence in the governor´s ability to pull Japan´s economy out of stagnation.

Tokyo stocks rose on relief the BOJ will maintain its huge stimulus - a cornerstone of the premier´s "Abenomics" reflationist policies - even as other major central banks head towards the exit.

"In the short term, the BOJ gave the stock market relief by not derailing Kuroda´s monetary policy.

It sent a message to the market that the main part of Abenomics will not change," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

However, many market watchers fear the BOJ´s massive money printing project, which is about to enter its fifth year, is increasingly untenable, distorting financial markets and hurting the country´s banks.

While growth in the world´s third-largest economy has improved thanks largely to stronger global demand, inflation remains far short of the BOJ´s 2 percent target.

The government also nominated Masazumi Wakatabe, a 52-year-old Waseda University academic and an advocate of aggressive easing, for BOJ deputy governor.

The choice of Wakatabe could complicate Kuroda´s task of engineering a slow but steady exit from the BOJ´s stimulus.

All the same, it could also help the BOJ dispel market speculation it may dial back stimulus earlier than expected, and allow it to shift gear back toward more easing if continued gains in the yen threaten Japan´s economic recovery, some analysts say.

"The BOJ is in no position to tighten policy anytime soon given rises in the yen. Contrary to market expectations, the next step could be ease further if yen rises persist," said Yasunari Ueno, chief market economist at Mizuho Securities.

"Wakatabe will tip the board´s balance towards more easing." The other deputy governor post went to BOJ Executive Director Masayoshi Amamiya, a veteran central banker known for masterminding various monetary policy steps.

The nominations need approval by both houses of parliament, which is a near certainty as Abe´s ruling coalition has a comfortable majority.

As a former top Japanese currency diplomat, Kuroda had criticised the BOJ for not doing enough to ease the pain a strong yen was inflicting on an export-reliant economy.

His calls for more radical monetary steps drew Abe´s attention and brought him to the BOJ helm in 2013, where he worked with Amamiya to deploy a sweeping asset-buying programme.