December 5, 2017 / 4:10 AM / a year ago

BOJ Kuroda says didn't discuss succession plan with PM Abe

TOKYO (Reuters) - Bank of Japan Governor Haruhiko Kuroda said on Tuesday he did not discuss with Prime Minister Shinzo Abe who would head the central bank when his term expires in April next year.

Central Bank Governor Haruhiko Kuroda of the Bank of Japan attends ECB's Central Bank Communications Conference in Frankfurt, Germany, November 14, 2017. REUTERS/Kai Pfaffenbach

“The subject of who will become the next BOJ governor did not come up at all,” Kuroda told reporters after a meeting with Abe that lasted for about an hour.

When asked whether he would serve a second five-year term if requested, Kuroda said, “It would be presumptuous of me to respond.”

Kuroda said he discussed the global economy with Abe and told him that economic conditions were solid.

Kuroda regularly meets Abe to discuss the economy and financial markets, but the timing of the meeting on Tuesday is likely to fuel speculation that the government is already making moves to determine who will lead the BOJ next year.

Some economists and even some officials in the BOJ worry that the central bank’s purchases of government debt and exchange-traded funds have become excessive after almost five years of quantitative easing.

The BOJ’s next challenge is to modify quantitative easing so its policy is more sustainable but still loose enough to encourage inflation, some economists say.

Etsuro Honda, an influential adviser to Abe who currently serves as Japan’s ambassador to Switzerland, declared his intention to succeed Kuroda in an interview with Reuters, heightening speculation that a succession plan was taking shape, although it was far from certain whether Kuroda would be leaving.

Abe handpicked Kuroda to lead the BOJ and steer monetary policy toward a radical form of quantitative easing intended to meet the central bank’s 2 percent inflation target.

Inflation has remained below the 2 percent target, but some economists argue that Kuroda should serve a second term so he can see through the campaign begun in April 2013 to jolt the economy out of a long deflationary phase.

Reporting by Stanley White; Editing by Chang-Ran Kim & Simon Cameron-Moore

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