"It could be a close call depending on whether the DPJ takes a unified stance against Mr Iwata or allows individual members to vote as they wish"
- Kyohei Morita, chief Japan economist at Barclays Plc
The Democratic Party of Japan has shown its readiness to support appointment of Kuroda as the next Bank of Japan governor and Kikuo Iwata as one of the deputies. The announcement is reducing the risk that Prime Minister Shinzo Abe will fail to win confirmation for all three of his central bank nominees. Earlier this week, the main opposition party said that they would oppose Gakushuin University professor Kikuo Iwata's nomination because of his extreme stance on monetary policy. As the ruling coalition lacks an upper house majority, Abe will need opposition lawmakers to secure the new central bank leadership team. The number of BoJ board votes in favour of greater asset purchases can be decreased in case candidacy of Iwata, who has advocated greater monetary stimulus for more than 20 years, is rejected. All three nominees need 118 votes in the upper house, while Abe's Liberal Democratic Party and coalition partner New Komeito have only 102 votes, with the DPJ having 87.
"It could be a close call depending on whether the DPJ takes a unified stance against Mr Iwata or allows individual members to vote as they wish," Kyohei Morita, chief Japan economist at Barclays Plc in Tokyo, wrote in a note to clients yesterday. "We believe any stance that causes gridlock and delay could leave the DPJ vulnerable to public criticism ahead of this summer's upper house election."
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