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BOJ nominee vows to push fresh stimulus

(Shanghai Daily)

08:55, March 12, 2013

THE Japan government's choice to lead the country's central bank promised yesterday to move quickly to implement fresh monetary stimulus to lift the struggling economy, a case underlined by a surprisingly sharp drop in a gauge of capital investment.

However, Haruhiko Kuroda's declaration that "speed is important" appeared to run into resistance from Bank of Japan board member Koji Ishida, who in separate comments voiced caution against taking unorthodox steps too hastily.

The divergence of opinion highlights that while the nine-member board generally agree on the need for further stimulus, there are differing views on how best to revive an economy that has struggled for consistent growth for years.

"I want to debate policy steps with the monetary policy committee and implement these steps as soon as possible," Kuroda told lawmakers in a one-day upper house confirmation hearing.

He said he would do what ever it takes to hit the BOJ's inflation target of 2 percent. The economy has rarely seen that level of inflation since the early 1990s.

Kuroda is likely to be approved by parliament later this week because opposition parties, whose support is needed in the upper house, have indicated they would back him.

Supporters of the more aggressive monetary policy advocated by Prime Minister Shinzo Abe can point to a 13.1 percent drop in core machinery orders in January from December as highlighting the need for urgent action.

Analysts and government officials suggested the much weaker-than-expected figures released yesterday were a blip in a typically volatile data series, but they did show companies were cautious in their spending plans. Analysts had expected a fall of just 2 percent.

Japan has been in deflation for most of the past two decades and figures last week showed that the economy edged out of its fourth recession since 2000 in the last quarter of 2012.

Kuroda has advocated bolder and swifter action such as buying more risk assets and more longer-dated government debt, points he repeated to the upper house.

"We're in an environment where there is limited room to lower interest rates further," Kuroda said. "That's why it is important to try to influence market expectations."

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