By Leika Kihara
TOKYO (Reuters) – Japan’s decades of ultra-low interest rates may reach a turning point on Wednesday as the central bank debates the fate of its yield control policy, which is creaking under pressure as markets repeatedly break a limit set less than a month ago.
The Bank of Japan (BOJ) also awaits a leadership transition as Governor Haruhiko Kuroda’s second five-year term ends in April. Below are key dates to watch:
BOJ LEADERSHIP RACE
Prime Minister Fumio Kishida will hand-pick nominees for the governor and deputy governor posts from a list crafted by his close aides and finance ministry officials.
The government is expected to present the nominees to parliament on Feb. 10, sources have told Reuters, which is most likely to be approved as the ruling coalition holds a majority in both houses of parliament.
Under the current Diet schedule, the lower house will likely conduct a hearing of the BOJ nominees on Feb. 16-17 and the upper house on Feb. 20-21, according to the sources.
Kuroda’s term ends on April 8, while those of his deputies Masayoshi Amamiya and Masazumi Wakatabe expire on March 19.
There is a slim chance Kuroda might step down early from his post, so that the new governor can assume the post together with the new deputies on March 20.
People seen as top candidates for the BOJ governor post include incumbent deputy governor Amamiya, as well as former deputy governors Hiroshi Nakaso and Hirohide Yamaguchi.
BOJ RATE-SETTING MEETINGS
After Wednesday’s policy-setting meeting, the final one for Kuroda and his two deputies will be held on March 9-10.
The subsequent meeting will be held on April 27-28 under a new BOJ leadership. At the April meeting, the BOJ will issue for the first time its quarterly growth and inflation projections for fiscal 2025, which will offer clues on how quickly the central bank could move toward an exit from ultra-easy policy.
By the time the BOJ holds its April meeting, big firms would have agreed with unions on next year’s annual pay in “shunto” spring wage negotiations.
OTHER KEY EVENTS
Japan’s consumer inflation data will remain in the spotlight as the central bank gauges the timing of an interest rate hike.
Already, core consumer inflation exceeded the BOJ’s 2% target for eight straight months in November, as companies hike prices to pass on higher raw material costs to households.
Data due out on Friday is likely to show core consumer inflation hit a fresh 41-year high of 4.0% in December, according to a Reuters poll. Analysts expect it to stay above the BOJ’s 2% target for several more months, before slowing due to recent declines in global commodity costs.
Consumer inflation data for January is due out Feb. 18, and that for February on March 18.
The new BOJ governor will also be busy with international meetings. The first major one involving travel will likely to be the spring International Monetary Fund (IMF) meetings to be held in Washington D.C. on April 10-16.
Japan will also chair this year’s Group of Seven (G7) meeting of advanced economies, where inflation and monetary policy will likely be among key topics of debate.
(Reporting by Leika Kihara; Editing by Sam Holmes)
