Tokyo - The Abe administration picked a veteran executive of Toyota Motor Corporation, one of the biggest beneficiaries of Abenomics, to replace a Bank of Japan board member who in October had opposed expanded monetary stimulus.
Yukitoshi Funo, 68, a former chief of Toyota’s North American operations, was nominated for the board slot that opens in June. The pick must be confirmed by both houses of parliament, where Prime Minister Shinzo Abe’s coalition holds majorities.
Funo was among those decrying yen strength years before Abe came to office in 2012, since when BOJ Governor Haruhiko Kuroda’s unprecedented stimulus has sent the currency tumbling. The businessman would join the nine-member panel at a time when it’s confronting diminishing inflation pressures thanks to cheaper oil. Analysts forecast further stimulus later this year.
“Given his experience in the auto industry, he’ll know a lot about currency markets and the global economy,” said Yasunari Ueno, economist at Mizuho Securities Co. “People in the market will expect Funo to see gains in the yen as a significant risk for the Japanese economy.”
Funo, a proficient English speaker, also previously ran Toyota’s Asian business outside of Japan, and is currently an adviser to the automaker. Morimoto, a former executive at Tokyo Electric Power Company, ends his term on June 30.
If approved by parliament, Funo would participate in the policy board’s July 14-15 meeting.
Voting patterns
Morimoto sided with board members Koji Ishida, Takehiro Sato and Takahide Kiuchi in voting against Kuroda’s decision on October 31 to increase the pace of asset purchases in the closest vote the BOJ had seen since 2008.
The dissenters were concerned about damage to the functioning of the market and the risk that the BOJ would be perceived as financing fiscal deficits, Morimoto said in a speech on February 9.
Yutaka Harada, an economist who has said Japan can beat deflation by printing money, assumed a seat vacated last month by Ryuzo Miyao, who supported the October 31 decision. Harada co-edited a book “Reflationary Policy Revives Japan’s Economy” with Deputy Governor Kikuo Iwata and Abe adviser Koichi Hamada.
After boosting monetary stimulus in October to counter a “deflationary mindset,” Kuroda has kept the pace of easing steady, even as inflation has stalled with the plunge in oil prices.
Inflation gauge
The BOJ’s main price gauge showed inflation grinding to a halt in February from last year’s peak of 1.5 percent in April. The BOJ kept its policy unchanged on April 8, when Kuroda said the economy faced less risk of relapse to deflation than it did last October.
The yen has fallen 22 percent against the dollar since Kuroda introduced the record stimulus programme two years ago, fuelling profits of big exporters while increasing costs of imports that have squeezed smaller companies.
* With assistance from Yoshiaki Nohara in Tokyo
Bloomberg