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Bank of Japan emergency meeting seen unlikely, but officials prepare just in case
March 13, 2013 / 11:26 AM / in 5 years

Bank of Japan emergency meeting seen unlikely, but officials prepare just in case

TOKYO (Reuters) - Bank of Japan officials are preparing contingency plans for an emergency policy meeting in case the incoming new governor decides to call one, sources with knowledge of the central bank’s thinking said.

A man walks past the Bank of Japan in Tokyo March 7, 2013. REUTERS/Yuya Shino

The decision will rest entirely with the new BOJ governor, expected to be Haruhiko Kuroda, although he has not been confirmed in the job yet, they said.

But since expectations in Japan and financial markets are high that the new leadership will want to move quickly to announce fresh stimulus measures, officials are lining up policy options and do not rule out the chance of an emergency meeting, the sources said.

Still, the odds of an emergency meeting are low and the new governor is more likely to hold his first formal policy review at the next scheduled meeting on April 3-4, the sources and analysts said.

“The new governor can’t decide this on his own. Others in the board must side with him, which would need a lot of time for convincing,” said Hideo Kumano, chief economist at Dai-ichi Life Research Institute in Tokyo.

“If Kuroda wants to come up with something new, it would makes sense for him to take time. Even deciding to act on April 3-4 would leave him with very little time,” he said.

Parliament is widely expected on Friday to approve Asian Development Bank President Kuroda as the new BOJ governor and Kikuo Iwata and Hiroshi Nakaso as deputy governors. They would take over at the central bank after the incumbents leave on March 19.

Financial markets have been rife with speculation that Kuroda will call an emergency meeting after he highlighted on Monday the need to “act with speed” in pulling Japan out of deflation.

The speculation suggests that Kuroda would want to call an emergency meeting to show that the central bank is acting with a sense of urgency in trying to revive the economy from years of sluggish growth and deflation.

Even if he was to call an emergency meeting, it probably would not happen until days after Kuroda joins the BOJ, either on March 20 or 21. March 20 is a public holiday in Japan.

Kuroda has said he would be ready to do whatever it takes to beat deflation, including an overhaul in the way the central bank buys assets and targeting longer-dated government bonds in pumping money in to the economy.

Editing by Neil Fullick

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