World Economy

BOJ’s Kuroda Said to be in Stimulus Mode

BOJ’s Kuroda Said to be in Stimulus Mode
BOJ’s Kuroda Said to be in Stimulus Mode

The nomination of the Bank of Japan’s newest board member is prompting investor speculation Gov. Haruhiko Kuroda will find it easier to expand monetary stimulus.

Yukitoshi Funo, an adviser at Toyota Motor Corp. who previously ran its Asian business outside of Japan, is waiting to be confirmed by the Diet. Funo is set to replace Yoshihisa Morimoto, who voted against the BOJ’s October decision to increase its asset purchases and whose term ends June 30. Kuroda won last year’s policy vote with a majority of just 5 to 4. The move sent the yen plunging, Yonhap reported.

“Kuroda is in the mode to stimulate further,” said Hideo Shimomura, the chief fund investor in Tokyo at Mitsubishi UFJ Asset Management, which oversees the equivalent of $66.9 billion. “New members will support him. The policy votes won’t be a close call. Kuroda will easily get a majority.”

The current pace of the central bank asset purchases has failed to prevent the inflation gauge the BOJ watches from falling to zero. Speculation Kuroda will seek more action has driven a rally in sovereign bonds that cut the two-year yield to minus 0.02 percent Friday. The yen will drop more than 4 percent against the dollar by year-end, according to a Bloomberg survey of economists.

Investors don’t know much about Funo so they are basing their assessment on the fact that he was nominated by Prime Minister Shinzo Abe’s administration and worked for Toyota, said Naruki Nakamura, the head of fixed income in Tokyo at BNP Paribas Investment Partners Japan.

The BOJ shouldn’t expand its record monetary stimulus, as such a move would fail to spur growth and make prospects for an eventual exit from the policy harder, said Yoshimitsu Kobayashi, who started Monday as chairman of a business lobby, the Japan Association of Corporate Executives.