BOJ newcomer calls for corporate-style pragmatism in policy
By Leika Kihara
TOKYO (Reuters) - The Bank of Japan's new board member, Yukitoshi Funo, said policymakers must respond flexibly to changes in the economy while trying to achieve a 2 percent inflation target, signalling that he won't be bound by a rigid time frame for meeting that goal.
The former Toyota Motor Corp executive <7203.T> also said Japanese firms must boost productivity and become resilient to currency volatility, suggesting that he won't pay heed to calls from the business sector to sway yen moves with monetary policy.
Funo said that while achieving the BOJ's price target is important, the appropriate way to hit the goal may change depending on external factors and changes in the economy.
"In corporate jargon, it's plan, do, check and act," Funo told a news conference upon joining the board on Wednesday.
"You always need to check your plan against reality when you're trying to achieve a goal," an approach that applies to policymakers too as the economy is a "living thing," he said.
Funo joins a deeply fragmented board that voted to expand monetary stimulus last October by a 5-4 vote with dissenters openly voicing concern over the drawbacks of topping up an already massive stimulus programme.
He replaced Yoshihisa Morimoto, a former utility executive who voted against last year's surprise monetary easing, and his appointment may tilt the board more in favour of Governor Haruhiko Kuroda.
Funo said the BOJ's massive stimulus was exerting its intended effect, suggesting that he is unlikely to rock the boat for the time being.
"His comments suggest he is supportive of Kuroda's policy stance," said Naomi Muguruma, senior market economist at Mitsubishi UFJ Morgan Stanley.
But Funo added that it was "natural" to have split votes and differing views on policy within the board, a sign he won't hesitate to speak up against the governor.
Little has been known on Funo's views on monetary policy.
But more than four decades of experience at the auto giant, including heading its crucial U.S. sales operation, may bring a dose of real-world pragmatism to the BOJ, which is embarking on a radical stimulus experiment aimed at changing corporate and houshold behaviour.
Funo's first policy-setting meeting will be on July 14-15, when the board conducts a quarterly review of its long-term economic and price forecasts.
Some analysts have speculated that his background as a former Toyota executive suggests he will favour policies that will keep the yen weak and give Japanese exports a competitive advantage overseas.
Funo, however, sidestepped a question on whether further yen weakness was negative for the economy or whether he thought further monetary easing was necessary.
"Markets determine exchange rates. For that reason, it's important for Japanese companies, and the economy, to become resilient to exchange-rate volatility," he said.
(Additional reporting by Stanley White and Tetsushi Kajimoto; Editing by Simon Cameron-Moore)
