Government stalls on nominating governor for the Bank of Japan

Prime Minister Shinzo Abe has demanded aggressive action from a new governor due to be appointed by end-March, prompting expectations he would favor a candidate willing to carry out radical policies to lift Japan out of years of deflation.

However, Finance Minister Taro Aso and others in Abe's ruling party are looking for a more moderate candidate, according to sources close to the selection process. Some government officials are concerned that a governor promoting radical policies could upset financial markets.

“There's probably some disagreement between Aso and Abe,” said Hiroaki Muto, senior economist at Sumitomo Mitsui Asset Management.

Abe had declared on Monday he would make an announcement “soon” and the sources close to the selection process had said they expected the premier to make a nomination early this week.

However, Economics Minister Akira Amari said on Tuesday the government would not nominate a governor and the deputy governors until after Abe returns from a trip to the United States on Feb. 21-24.

“After Prime Minister Shinzo Abe returns, we will lay the ground work to reach an agreement with opposition parties within this month,” Amari told a news conference after a cabinet meeting. Parliament must approve the government's nomination, including the upper house where Abe lacks a majority.

The delay is also partly because of a parliamentary rule, set by ruling and opposition parties five years ago, that once the name of a nominee is leaked to the media the candidate will be automatically disqualified.

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