2 Reflationists Tapped as BOJ Policy Board Members

Tokyo, Feb. 25 (Jiji Press)–The Japanese government on Wednesday nominated two academics considered to be reflationists as members of the Bank of Japan’s Policy Board. The move is seen as a warning against the central bank’s gradual interest rate hikes, as Prime Minister Sanae Takaichi favors fiscal expansion and monetary easing. The two nominees are Toichiro Asada, professor emeritus at Chuo University, and Ayano Sato, professor at Aoyama Gakuin University. They are among the 22 people nominated to posts at 11 institutions in a proposal the government presented to the steering committees of both chambers of the Diet, the country’s parliament. The nominees require Diet approval to be appointed. Asada, who specializes in theoretical economics, explained the importance of proactive fiscal policy at a meeting of the ruling Liberal Democratic Party in the past. Sato, an expert in international finance, gave a lecture in 2023 to a group of LDP lawmakers, arguing that a weak yen would be positive for the Japanese economy in the long term. She proposed leveraging the yen’s weakness to encourage companies to shift production back to Japan, leading to economic growth. The BOJ Policy Board, the highest decision-making body of the central bank, has nine members including the governor and the two deputy governors. The terms of office of current Policy Board members Asahi Noguchi and Junko Nakagawa will end on March 31 and June 29, respectively. They will be replaced by Asada and Sato. Under Abenomics, or the reflationary policy mix of the late Prime Minister Shinzo Abe, the government nominated a number of reflationists to the Policy Board, but of them only Noguchi remains on the board. If the latest appointments are approved by the Diet, there will be one additional reflationist on the board. “The government has nominated (Asada and Sato) as suitable BOJ Policy Board members with high insights on economy and finance,” Chief Cabinet Secretary Minoru Kihara told a press conference on Wednesday. “The specific methods of monetary policy should be left to the BOJ,” he added. It remains to be seen what positions the two nominees will actually take on monetary policy operations. “They are likely to take a cautious stance on further interest rate hikes,” Ryutaro Kono, chief economist at BNP Paribas Securities (Japan) Ltd., said. END [Copyright The Jiji Press, Ltd.]