Business News

Japan Government Sticks with Ikeo for BOJ


The Japanese government nominated hawkish economics professor Kazuhito Ikeo to the Bank of Japan's rate-setting policy board on Thursday, despite his previous rejection by opposition lawmakers, setting the stage for another political tussle in parliament.

The opposition bloc, which controls parliament's upper house so can veto BOJ appointments, had previously rejected Ikeo on Tuesday in protest at his name being leaked to media before its lawmakers had a chance to consider his candidacy.

It was the fifth time the opposition had rejected a government nominee for the BOJ, adding to headaches for Prime Minister Yasuo Fukuda whose support rates have plunged amid an opposition campaign for an early election.

An opposition lawmaker, emerging from a parliamentary panel meeting, told reporters that Ikeo's name had been put forward as a board member but no nomination was made for the BOJ board's other vacancy, for a deputy governor.

Senior officials suggested they are unlikely to pick a candidate for deputy governor by June 15, when the current parliament session is due to end. The central bank's policy board has continued holding rate reviews with seven members.

BOJ Governor Masaaki Shirakawa only won the job in April as third choice after a three-week vacancy at the top of the central bank.

For markets, the ongoing political saga is a side show, but the row comes amid repeated warnings from Shirakawa of highly uncertain times that have led the BOJ to end its bias towards raising rates. 

Retail sales figures issued on Thursday showed consumer spending had stalled, with April sales just 0.1 percent ahead of a year earlier.

Ikeo, an economics professor at Tokyo's Keio University, has written numerous books on the banking sector and financial system and has served on several government panels such as the financial council and the fiscal system council.

An expert on banking, he has been sceptical of the effect of monetary easing on boosting growth -- a stance similar to many economists at the central bank.