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Analysis-Mr. Exit or Mr. BOJ? Race for Japan’s top central bank job to intensify



© Reuters. FILE PHOTO: A man wearing a protective mask stands in front of the headquarters of Bank of Japan amid the coronavirus disease (COVID-19) outbreak in Tokyo, Japan, May 22, 2020.REUTERS/Kim Kyung-Hoon

By Leika Kihara

TOKYO (Reuters) – The decision over who will be the Bank Japan’s next chief will likely focus on two career central bankers whose different policy approaches and track records could affect the timing of an eventual exit from ultra-easy monetary policy.

As former and incumbent deputy governors, Hiroshi Nakaso and Masayoshi Amamiya have deep expertise in central bank affairs, which makes both of them a safe pair of hands in guiding a future exit from ultra-low interest rates, however distant that may be.

Long touted as front-runners in the BOJ leadership race, neither would rush into tightening monetary policy given Japan’s fragile economy and the need to keep low the cost of funding its huge public debt, say five former and incumbent policymakers who have worked with or under them.

But the two could differ on how soon the BOJ should roll back a complex framework of policies that combine huge asset buying, negative short-term interest rates and a 0% yield cap that makes Japan an outlier amid a global scramble to raise rates, they say.

“Nakaso belongs to a camp that believes central banks should not intervene too deeply in markets, while Amamiya appears more flexible,” said Nobuyasu Atago, a former BOJ official who is now chief economist at Ichiyoshi Securities.

“The key difference lies in their views on how far central banks should stretch the boundaries of monetary policy.”

Prime Minister Fumio Kishida’s selection of a successor to BOJ governor Haruhiko Kuroda, whose term ends in April next year, is likely to intensify after an upper house election in July.

A ruling party victory, which seems a near certainty due to a weak opposition, would solidify Kishida’s grip on power and allow him to differentiate his policies from former premier Shinzo Abe’s “Abenomics” economic stimulus.

That may work in favour of Nakaso, who has criticised Abenomics as having been overly reliant on monetary policy and repeatedly warned of the cost of prolonged easing.

In a recently published book, Nakaso laid out in detail how the BOJ could end ultra-loose policy: Raise the interest paid on financial institutions’ excess reserves, stop reinvesting money from bonds when they mature, and gradually trim the bank’s balance sheet to levels where market functions recuperate.

“If the public becomes more accepting of higher prices, interest rates will come under upward pressure and allow the BOJ to normalise monetary policy,” he told Reuters.

Nakaso is currently chairman of the Daiwa Institute of Research, a private think tank.

GRAPHIC: Doves and Hawks (

By contrast, Amamiya, as Kuroda’s right-hand man, has consistently preached the need to keep rates ultra-low to prop up growth, even if that meant straining financial institutions’ margins and draining market liquidity.

Unlike Nakaso, whose career centred on international and market affairs, Amamiya has spent most of his years at the BOJ drafting monetary policy ideas. He is known for masterminding many unconventional monetary easing steps that earned him the nick-name “Mr. BOJ.”


To be sure, Kishida could opt for a dark horse with no background in monetary policy. Uncertainty over the economic and inflation outlook could sway the direction of monetary policy either way, regardless of who takes the BOJ’s helm.

Some analysts also caution against branding Amamiya as an outright policy dove. In a speech delivered in 2017, he pointed to “many criticism and voices of concern” over the risk the BOJ’s yield cap policy may force it to bankroll government debt and make a future exit from ultra-loose policy difficult.

As a senior BOJ executive, Amamiya played a key role in shifting the BOJ’s policy target in 2016 to interest rates from the pace of money printing – relieving the bank from buying bonds at a set pace.

He was also deeply involved in a policy review last year, when the BOJ ditched a pledge to buy risky assets aggressively.

“If need be, he can easily switch course as he’s a pragmatist, rather than someone who clings to beliefs on what path the BOJ should take,” one of the sources said of Amamiya.

“One thing is for sure – whoever gets the job will face the enormous task of untangling Kuroda’s stimulus,” said Atago of Ichiyoshi Securities.


World economic news now by the morning of Dec. 6



economic news around the world

The FT reported on tanker jams in the Turkish straits due to the Russian oil price ceiling, and NATO analysts assessed the Bank of Russia’s foreign currency reserves seized abroad – these and other world economic news now for the morning of Tuesday, December 6, read more.

Economic news around the world 

A tanker jam has formed near the Turkish Bosporus and Dardanelles straits, through which ships carrying Crude Oil from Russian Black Sea ports pass. Turkish authorities demanded insurers fully insure ships passing through the straits, after the G7 countries, the European Union and Australia imposed a ceiling on oil prices from Russia, said the Financial Times. 

The newspaper’s sources claimed that ships with Western insurance coverage were delayed, while ships with documents from Russian insurers were allowed through Turkish waters. 

The U.S. and European Union countries have managed to seize no more than a third of Russia’s foreign currency reserves blocked abroad. According to the Atlantic Council, this is $80-100 billion out of a total of $300 billion in foreign currency reserves.

India is in discussions with Apple (NASDAQ:AAPL) to locate iPad production in the country and is exploring options for shipping components for them from China, CNBC reported, citing two sources close to the Indian government. Plans have no specifics so far, but if negotiations with Indian authorities are successful, Apple will expand its presence in the country.

A federal court in Australia has asked UC Rusal (MCX:RUAL) for documents on alumina supplies to Queensland Alumina (QAL), the aluminum company’s ties with the Russian government and entrepreneurs under sanctions, Kommersant reported, citing court data. The documents were asked by the court on the claim of Alumina and Bauxite Company, an Australian “subsidiary” of UC Rusal: it owned 20% of QAL; the share went to Rio Tinto (LON:RIO), which had the remaining 80% of the company.

Earlier we reported that the average house prices in the UK fell by 1.4% in November.

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South Korean exports dropped 14% in November, the highest in 2.5 years



exports South Korea

South Korea’s exports fell 14 percent year-on-year to $51.91 billion in November, preliminary data from the Ministry of Commerce, Industry and Energy showed. The November drop was the biggest in 2.5 years since May 2020 and was caused both by the deteriorating global economy, which even a Google price chart showed, and a truckers’ strike in the country.

South Korea exports 2022 – reasons for the drop

Exports fell for the second month in a row. Analysts on average expected an 11% decline, according to Trading Economics. Respondents to MarketWatch predicted a 10.5% decline.

Shipments of semiconductor products overseas, the country’s top export item, fell 29.8%; petrochemicals fell 26.5% and steel exports fell 10.6%. Meanwhile, exports of automobiles jumped 31% and petroleum products 26%.

Exports to China, South Korea’s largest trading partner, fell by 25.5%, and to Asian countries – by 13.9%. Below, supplies to the USA grew by 8% and to the European Union – by 0.1%.

In January-November exports rose by 7.8% on the same period last year and reached a record $629.1 billion.

South Korean imports rose 2.7% to $59.2 billion in November, marking the 23rd consecutive month of gains, but the current rate of growth is the lowest since November 2020. Experts had predicted an increase of only 0.2%.

South Korea’s trade deficit last month was $7.01 billion, compared with a surplus of $2,973 billion a year earlier.

The negative balance was recorded for the eighth month in a row. As a result, by the end of 2022, the country may record a foreign trade deficit for the first time since the financial crisis in 2008.

Earlier we reported that the UN estimates the cost of humanitarian aid in 2023 at a record $51 billion.

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The UN estimates humanitarian aid costs in 2023 at a record $51 billion because of an impending humanitarian crisis



a humanitarian crisis

Joint humanitarian operations will require a record $51.5 billion in 2023 to address urgent problems.

The UN Office for the OCHA estimates that 339 million people will need urgent aid in 2023. At the same time, OCHA called on donor countries to provide funds for assistance in 2023 to the 230 million people most in need, living in 68 countries.

Griffiths explained that aid is needed not only for people experiencing conflicts and disease outbreaks. but also for those suffering the effects of climate change, such as people in peninsular Somalia facing drought and those in Pakistan experiencing severe flooding. For the first time, the growing humanitarian crisis has brought the number of displaced people worldwide to the 100 million mark. Also worsening an already bad situation is the worldwide coronavirus pandemic, which affects the poor. Note that the general economic crisis has begun to negatively affect even the Netflix price chart.

Earlier we reported that house prices in the UK fell by 1.4% in November.

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