The government has decided to retain Bank of Japan Governor Haruhiko Kuroda for another term, sources close to the matter said Friday.
The reappointment of the 73-year-old Kuroda, whose five-year term as BOJ chief expires in April, apparently underscores the government's wish to accelerate efforts toward boosting economic growth and declaring an end to decades of deflation.
The government is expected to submit its nominees for the next BOJ governor and deputy governors to parliament by the end of February, according to the sources.
Under Kuroda, market watchers expect the BOJ to stay the course and keep its accommodative stance for the time being.
Kuroda, who took over the BOJ governorship in March 2013 and has been widely expected to serve another five-year term, set a target to attain 2 percent inflation and carried out a set of bold monetary easing steps such as increased purchases of government bonds and risky financial assets. They formed an integral part of Prime Minister Shinzo Abe's "Abenomics" policy mix.
The yen subsequently weakened against the U.S. dollar, giving a boost to Japanese exporters. Corporate earnings have hit record highs and the country's labor market conditions have improved during his term.
The current economic expansion phase, which began in December 2012 when Abe returned to power, is believed to be in the second-longest in postwar Japan.
But the BOJ is still far from reaching its 2 percent inflation target as growth in consumer prices remains modest. Japan's core consumer prices rose 0.9 percent from a year earlier in December, according to government data.
Since 2013, the BOJ has pushed back the timing for achieving the inflation goal six times and it now expects to meet the goal around the fiscal year starting April 2019.
Still, Abe praised Kuroda during a parliamentary session earlier this week for having taken massive monetary steps that he described as helping "change the atmosphere in financial markets."
Kuroda, a former Finance Ministry official who later headed the Asian Development Bank, has pledged to maintain "powerful" monetary easing strenuously.
The focus of Kuroda's next five-year term is expected to be on how the BOJ will taper its stimulus as major central banks such as the U.S. Federal Reserve shift toward normalization of extraordinary policy steps.
Currently, the BOJ has undertaken its so-called yield curve control -- consisting of a short-term policy rate of minus 0.1 percent and government bond purchases aimed at guiding the 10-year yield to around zero percent.
But concerns have already grown over the adverse impact of prolonged monetary easing on the financial system and the government's commitment to fiscal discipline as borrowing costs can be kept extremely low.
BOJ policy board member Hitoshi Suzuki said Thursday that low interest rates have made it easier for companies to secure funding but acknowledged that intense competition among banks to offer lower lending rates has eroded their profitability.