TOKYO (Reuters) - Two prominent economists, including a vocal advocate of aggressive monetary easing, are the new nominees for empty seats on the Bank of Japan’s nine-member policy council after lawmakers rejected an earlier candidate for not aggressively supporting looser policy.
The nominations of Takehiro Sato, chief economist at Morgan Stanley MUFG Securities, and Takahide Kiuchi, chief economist at Nomura Securities, need approval by both houses of parliament.
If approved, they will replace Hidetoshi Kamezaki and Seiji Nakamura, both former business executives whose terms expired in April, and serve five-year terms. The nine-member board would then recover full strength as early as July.
Sato, a well-known BOJ watcher, has frequently criticized the central bank for not doing enough to beat deflation and has called for more aggressive measures to reflate the economy. Kiuchi has taken a more neutral approach on monetary policy.
Early in April, legislators in the opposition-controlled upper house turned down the government nomination of Ryutaro Kono, chief economist at BNP Paribas in Tokyo and a respected central bank watcher, signaling that lawmakers intend to keep up pressure on the BOJ for more monetary stimulus to boost the economy.
Analysts say the new choices may help the BOJ communicate better with markets.
“Both of them are close to markets. They may have been chosen because they can see things from a market’s perspective,” said Hideo Kumano, chief economist at Dai-ichi Life Research Institute.
An opposition party lawmaker said parliament will aim to vote on the nominations around June 21, when the current Diet session closes.
In a research note to clients sent after the BOJ’s monetary easing on April 27, Sato said that lingering political pressure will mean the central bank will continue to loosen policy with the next round of action to come around July.
“He is sensitive to market moves, so we can expect him to communicate the market’s feeling to people in the BOJ. In that sense, he may be dovish,” or more keen on easing policy, said Naoki Murakami, chief economist at Monex Securities in Tokyo.
The BOJ set a 1 percent inflation target and eased monetary policy in February and April trying to convince markets of its determination to beat deflation that has dogged the world’s third-largest economy for nearly a decade.
But some ruling Democratic Party lawmakers want to revise the central bank law to make the BOJ responsible for economic growth while the opposition wants the inflation goal to be doubled to 2 percent.
The BOJ next meets on June 14-15. It is ready to boost money supply again if Europe’s deepening debt crisis triggers a market shock and a yen spike to new records. Otherwise, it prefers to stand pat for now although the yen’s renewed rises have kept the BOJ under pressure to ease the stress on the export-reliant economy.
Nakamura and Kamezaki had mostly voted with the board’s majority.
Additional reporting by Leika Kihara; Editing by Michael Watson and Ed Lane