"Japan's economy can emerge from recession in the first quarter as consumer spending and exports are expected to pick up"
- Yasuo Yamamoto, senior economist at Mizuho Research Institute
The Japanese government started to make arrangements to propose next governor of the Bank of Japan. The Diet is expected to choose the best nominee by the end of this month. In the meantime, former top financial bureaucrat Toshiro Muto is the leading candidate to become Japan's next central bank governor, suggesting that nation's central bank will intensify stimulus efforts to reflate the economy, which fell deeper into recession in the last quarter of 2012. Earlier this month the current Governor of the Bank of Japan Masaaki Shirakawa decided to step down on March 19, almost three weeks before his term was due, as he was facing intense pressure for stronger monetary easing. Despite Shinzo Abe's pledge to introduce bold measures to end decades of deflation, some policy makers and government officials worry that radical measures may unsettle markets. The sharp depreciation of the Yen has already sparked global criticism of Japan's policies.
"Muto is considered as someone who would only follow the traditional approach such as expanding the BOJ's asset buying program. It would merely be an 'enhanced' version of the conventional approach," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities. "We cannot picture Muto going bold like buying foreign funds, a move that could accelerate yen declines."
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