Bank of Japan Begins Policy Meeting, Government to Name Replacement for Bank Chief.
Japan's central bank began a two-day policy board meeting Thursday, the last under Gov. Toshihiko Fukui, whose replacement the government will announce Friday. The government is expected to push a deputy governor at the Bank of Japan, Toshiro Muto, who is also a former bureaucrat at the powerful Ministry of Finance. But opposition parties, eager to wield their influence, may block that nomination.
Meanwhile, the bank is largely expected to keep interest rates unchanged amid worries about the global ripple effects of a U.S. credit crunch and the possibility that Japan could slip into recession as consumer buying slows, wages dwindle and company investments drop. The term of Bank of Japan Gov. Toshihiko Fukui ends March 19.
The opposition parties -- reported to favor Yutaka Yamaguchi, another deputy governor at the bank -- control the upper house of Parliament since a historic electoral victory last year, and they have hinted that they will block the government nomination. The prospect that the central bank's governor seat may go vacant has alarmed some people, including Prime Minister Yasuo Fukuda.
In an apparent effort to quell such worries, the chief government spokesman Nobutaka Machimura told reporters Thursday the government will announce its candidate for central bank chief on Friday.
He did not say who the appointment might be. The dissent voiced by the main opposition Democratic Party of Japan makes it unclear if Muto remains Fukuda's choice. Approval of the appointment must pass through both houses of parliament.
The Bank of Japan will be changing leadership at a critical time for the world's second largest economy. Data released Wednesday show Japan's business investment shrank at its fastest pace in more than five years during the fourth quarter. Capital spending, including investment in plant, equipment and software, declined 7.7 percent in the October-December period from a year earlier, the Ministry of Finance said. That was its biggest fall since the third quarter of 2002, when it dropped 12.2 percent.
The ministry's quarterly economic survey also showed Japanese companies' profit fell for the second straight quarter, declining 4.5 percent from a year earlier, the sharpest drop since April-June 2002. Higher crude oil and other raw material prices pushed up costs for companies, which weighed on their profits.
Analysts expect the government to revise its numbers on gross domestic product for the fourth quarter next week. The preliminary reading for October-December GDP stood at an annual rate of 3.7 percent growth.
Japan's central bank began a two-day policy board meeting Thursday, the last under Gov. Toshihiko Fukui, whose replacement the government will announce Friday. The government is expected to push a deputy governor at the Bank of Japan, Toshiro Muto, who is also a former bureaucrat at the powerful Ministry of Finance. But opposition parties, eager to wield their influence, may block that nomination.
Meanwhile, the bank is largely expected to keep interest rates unchanged amid worries about the global ripple effects of a U.S. credit crunch and the possibility that Japan could slip into recession as consumer buying slows, wages dwindle and company investments drop. The term of Bank of Japan Gov. Toshihiko Fukui ends March 19.
The opposition parties -- reported to favor Yutaka Yamaguchi, another deputy governor at the bank -- control the upper house of Parliament since a historic electoral victory last year, and they have hinted that they will block the government nomination. The prospect that the central bank's governor seat may go vacant has alarmed some people, including Prime Minister Yasuo Fukuda.
In an apparent effort to quell such worries, the chief government spokesman Nobutaka Machimura told reporters Thursday the government will announce its candidate for central bank chief on Friday.
He did not say who the appointment might be. The dissent voiced by the main opposition Democratic Party of Japan makes it unclear if Muto remains Fukuda's choice. Approval of the appointment must pass through both houses of parliament.
The Bank of Japan will be changing leadership at a critical time for the world's second largest economy. Data released Wednesday show Japan's business investment shrank at its fastest pace in more than five years during the fourth quarter. Capital spending, including investment in plant, equipment and software, declined 7.7 percent in the October-December period from a year earlier, the Ministry of Finance said. That was its biggest fall since the third quarter of 2002, when it dropped 12.2 percent.
The ministry's quarterly economic survey also showed Japanese companies' profit fell for the second straight quarter, declining 4.5 percent from a year earlier, the sharpest drop since April-June 2002. Higher crude oil and other raw material prices pushed up costs for companies, which weighed on their profits.
Analysts expect the government to revise its numbers on gross domestic product for the fourth quarter next week. The preliminary reading for October-December GDP stood at an annual rate of 3.7 percent growth.
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