Last weekend, the Japanese economy minister Akira Amari said he wants to see the Japanese stock market rise 17% to 13,000 by the end of March, in comments that break new G7 territory as the first policymaker to promote an equity index target. The comments reinforced expectations the government will nominate an uber-dove to head the Bank of Japan (BoJ) in an attempt to arrest Japan's decades-long terminal decline.Adding to this bullish narrative that deflation-fighting policiesfrom the Shinzo Abe administration would intensify, Asian Development Bank president Haruhiko Kuroda – tipped as a leading contender to become the new BoJ governor of in March – said equity purchases by the BoJ “could be justified”, sparking speculation of a more activist monetary stance under his leadership.
However, media reports have emerged over the past two days that suggest Toshiro Muto, a former deputy governor of the BoJ, is now the frontrunner.
Sorry to ruin your weekend, FX traders. The often-contrarian Capital Economics reckons Muto's leadership will (rightly) disappoint markets:
| “The significance of the emergence of Mr Muto as frontrunner is twofold. First, his approval by parliament could be relatively smooth, which is not something that can always be taken for granted. |