BOJ should set 2 yr target for inflation goal

TOKYO: Asian Development Bank President Haruhiko Kuroda said two years was an appropriate timeframe for the Bank of Japan to meet its new inflation goal, but declined to comment on whether he was in the running to take over at the central bank next month.

Kuroda, considered a strong candidate to replace BOJ Governor Masaaki Shirakawa when he steps down next month, told reporters on Monday he is happy with his current position and still has about four years left in his term at the ADB.

"I'm very satisfied with my current job and can't make any other comments," said Kuroda, who was in Tokyo for a seminar.

"I cannot respond to hypothetical questions," he said when asked what he would do if Prime Minister Shinzo Abe offered him the top post at the BOJ.

Abe is set to nominate a new BOJ governor and two deputies in coming weeks, and has made it clear he wants someone who will take bolder steps than Shirakawa has to revive the economy.

But his push for a governor who will pursue radical policy is meeting resistance from his cabinet and bureaucrats, who are wary of triggering market turmoil.

Last month, the BOJ adopted a 2 percent inflation target as a sign of its commitment to fight deflation. It also announced a shift to "open-ended" asset buying.

However, many investors were disappointed that even in taking unconventional steps the BOJ displayed a caution that critics say has characterised Shirakawa's term, delaying the "open-ended" buying until next year and limiting its scope.

Abe, who won office in December, wants to "correct" the trend for excessive yen gains to help the economy. He also wants to shake off nearly 20 years of deflation through aggressive central bank action and increased spending.

Kuroda, 68, was a career bureaucrat at Japan's finance ministry before moving to the Manila-based ADB. He has extensive international experience, making him an attractive candidate to some members of Abe's team.

Former BOJ Deputy Governor Toshiro Muto, 69, is also seen as a leading candidate. Some consider Muto a safer pair of hands because he has experience both as a bureaucrat at the finance ministry and serving on the BOJ board.

Whoever Abe nominates will have to be confirmed by parliament. This could be a problem, because his Liberal Democratic Party does not have a majority in the upper house.

Opposition parties could try to block either Kuroda or Muto on the grounds their careers at the finance ministry mean they could not conduct monetary policy objectively.