Does it matter who governs the Bank of Japan?

The Bank of Japan left rates on hold today, as universally expected. The real interest lies in the dispute over the replacement for Governor Fukui, who retires later this month. We think that the government’s preferred candidate Toshiro Muto will still be promoted to the top job and that, contrary to some market speculation, this will make very little difference to policy-making. Indeed, doubts over the Bank’s political independence are typically exaggerated.