The government is planning to submit to parliament its nominees for the next Bank of Japan governor and two deputy chiefs next week, sources with knowledge of the plan said Monday, as financial markets anxiously await clues on the future course of the country's monetary policy.
Prime Minister Fumio Kishida remained tightlipped about his possible selection, saying only that he will "thoroughly consider" candidates, as the yen plunged on market expectations that monetary easing will continue even after incumbent Haruhiko Kuroda, 78, leaves his post in April.
After the selection is presented to the steering committees of both chambers, the House of Representatives and the House of Councillors, the nominees will explain their policy stances and answer questions during hearings that will be held by early-March, the sources said.
The candidates have to be approved by parliament before the government can formally appoint them.
The next governor's five-year term will begin on April 9. As deputy governors Masayoshi Amamiya and Masazumi Wakatabe will see their five-year terms end earlier than the governor's, the BOJ will have new deputy chiefs on March 20.
Career BOJ official Amamiya, 67, is among the top candidates to take the helm of the central bank after playing a pivotal role in policymaking at critical junctures in recent years, including when its yield curve control program was introduced in 2016.
Financial markets are fixated on who Kishida will nominate as they speculate that the BOJ will dial back its monetary easing soon, with inflation in Japan well above the central bank's 2 percent target for months.
After a media report on Monday that the government has sounded out Amamiya about the job, the yen temporarily fell to a one-month low relative to the U.S. dollar.
Incumbent Kuroda became governor in 2013 and took aggressive monetary easing steps that formed a key pillar of the "Abenomics" economy-boosting program led by former Prime Minister Shinzo Abe.
Whoever succeeds Kuroda, difficult times await the BOJ, whose balance sheet has swollen after aggressive buying of government bonds and other assets to support the economy.
The BOJ has stuck to its view that ultralow rates will be needed until its inflation target is achieved stably, accompanied by wage growth. But its abrupt decision in December to widen the trading band for 10-year bond yields was widely taken as an effective rate hike despite Kuroda's explanation that it was aimed at fixing distortions in the bond market.
