November 1, 2017 / 12:53 PM / a year ago

Japan PM Abe says he trusts BOJ Kuroda's ability, no decision on next governor

TOKYO (Reuters) - Prime Minister Shinzo Abe said on Wednesday he had “not decided at all” who should succeed Bank of Japan Governor Haruhiko Kuroda when the latter serves out his five-year term next April.

Japan's Prime Minister Shinzo Abe attends news conference after deciding on his cabinet following parliament reconvening after the general election, at his official residence in Tokyo, Japan November 1, 2017. REUTERS/Toru Hanai

Speaking at a news conference after his re-election as premier, Abe said he trusted Kuroda’s ability as central bank governor and leaves monetary policy to him.

“We have created a situation in a short period of time that Japan is no longer in deflation as a result of strengthening policy coordination between the government and the BOJ,” Abe said, referring to improved job creation and availability.

“The government and the BOJ have achieved a major result on employment, which is the most important responsibility of politics.”

Abe went on to urge the central bank to continue efforts to accelerate inflation towards its 2 percent target. He pledged to put a decisive end to deflation by encouraging companies to raise wages.

His Liberal Democratic Party-led coalition retained its two-thirds “super majority” in parliament’s lower house in the Oct. 22 election. His coalition’s victory raised expectations that Kuroda is likely to be reappointed.

That would mean Kuroda’s legacy stimulus program will stay for the time being even as U.S. and European central banks head towards normalizing crisis-mode monetary policy.

Abe took office in December 2012, promising to pull Japan out of nearly two decades of economic stagnation and deflation. He hand-picked Kuroda as BOJ governor a few months later.

The world’s third largest economy is gradually recovering but prices are lagging behind, hovering far below the 2 percent inflation goal.

The central bank left monetary policy steady on Tuesday while a board newcomer called for clearer commitment to ramp up stimulus if necessary, potentially complicating future efforts by the central bank to dial back its massive monetary stimulus.

Reporting by Tetsushi Kajimoto; Editing by Clarence Fernandez/Mark Heinrich

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