The two-day meeting of the Bank of Japan’s Policy Board which concludes next Thursday (7th March) will of course be overshadowed by the imminent departure of Governor Shirakawa and his two Deputies. The Board will probably be happy to sit on the sidelines until the new team is in place. Haruhiko Kuroda and Hiroshi Nakaso would be relatively uncontroversial picks for Governor and Deputy Governor respectively. There are also plenty of “dovish” alternatives to Professor Kikuo Iwata, who may be too outspoken for the other Deputy post. However, a closer look at Mr Kuroda’s policy options suggests that the markets’ expectations of much more aggressive easing are likely to be disappointed.
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