By Leika Kihara
TOKYO (Reuters) -Japanese Prime Minister Fumio Kishida said on Friday he hoped to meet the government’s nominee for next central bank governor, Kazuo Ueda, as soon as he takes up his post to confirm the need for close coordination on economic policy.
“As soon as the nomination is approved by parliament and the new governor assumes the post, I would like to meet him as soon as possible to confirm the need for the government and the Bank of Japan to coordinate for sustainable, stable achievement of the bank’s price target,” Kishida told a news conference.
Earlier this month, the government named the 71-year-old academic as its pick to become next central bank governor in a surprise choice that markets initially saw as heightening the chance of an end to years of ultra-loose monetary policy.
In a confirmation hearing at the lower house of parliament, Ueda said on Friday the BOJ must maintain ultra-low interest rates to support the fragile economy.
Ueda also said he saw no immediate need to revise a decade-old joint statement signed between the government and the BOJ in 2013, under which the central bank commits to achieving its 2% inflation target “at the earliest date possible.”
“I’m aware of the comments Ueda made in parliament. The government, for its part, doesn’t have any discomfort over them,” Kishida said, when asked about Ueda’s comments showing he was in no rush to revise the joint statement.
The statement was signed in 2013 under strong pressure by then-Prime Minister Shinzo Abe for the BOJ to take bolder steps to beat deflation.
The BOJ’s pledge to achieve its price target “at the earliest date possible” served as the backbone of outgoing BOJ Governor Haruhiko Kuroda’s radical monetary stimulus and justification for keeping Japan’s interest rates ultra-low.
Critics have said the joint statement’s focus on the need to beat deflation has become outdated when Japan was facing an inflation rate well exceeding the BOJ’s 2% price target.
A panel of academics and business executives last month urged the BOJ to make its 2% inflation target a long-term goal instead of one that must be met as soon as possible, so it can more flexibly tweak its yield control policy.
The re-defining of the price target must be made in new policy accord between the government and the central bank that would replace the one crafted in 2013, the panel said.
Ueda will succeed Kuroda and take the BOJ’s helm on April 9 if approved by parliament, which is essentially a done deal due to the ruling coalition’s solid majority in both houses of parliament.
(Reporting by Leika KiharaEditing by Chang-Ran Kim and Kim Coghill)
