(Jan 28): Prime Minister Shigeru Ishiba’s government nominated a female academic and supporter of policy normalisation to join the Bank of Japan’s board at the end of March.

The government picked Junko Koeda, a 49-year-old Waseda University professor, as Ishiba’s first selection for one of nine seats on the BOJ board, according to a document released to reporters in parliament in Tokyo on Tuesday. The nomination is for the replacement of Seiji Adachi, a former private economist whose five-year term ends on March 25.

Koeda previously worked as a chief economist at the Finance Ministry and as an economist at the International Monetary Fund, according to Waseda University. Her appointment would likely further shore up support for Governor Kazuo Ueda’s drive to simplify policy and raise interest rates. It would also raise the number of female board members to two for the first time, a small but historic step in Japan’s efforts to increase diversity in policy-making positions.

“She has suggested that rate hikes aren’t necessarily contrary to economic growth,” said Masazumi Wakatabe, former BOJ deputy chief and also a professor at Waseda. “This is my view but her arguments may be considered as supportive for BOJ normalisation.”

The nomination comes just days after the BOJ raised rates for the third time in less than a year on Friday. With inflation hovering at or above 2% for almost three years and supported by rising wages, the central bank is expected to continue increasing borrowing costs. Economists surveyed by Bloomberg expect the BOJ’s next hike to come in July.

In 2022, Koeda argued in a column in the Nikkei newspaper that it’s important to look at the negative impact of prolonged ultra-low interest rates. She said it was desirable at the time to bring back yields to a more normal state as soon as possible.

While Adachi is a known reflationist, he has voted in favour of all three interest rate hikes in the past year under Ueda, so his replacement with a supporter of higher rates wouldn’t signify a major change in the balance of the board.

“The impact of her appointment would be neutral for the BOJ policy as the government has picked someone whose thinking is in line with the BOJ’s current policy,” said Nobuyasu Atago, chief economist at Rakuten Securities Economic Research Institute. “From the perspective of having two women on the board, I think that politically speaking, she is a favourable choice.”

Koeda would join incumbent female member Junko Nakagawa, a former chair of Nomura Asset Management. The central bank has always had only one female board member since the current system took effect in 1998.

The BOJ ranked 156th among 185 central banks in a 2024 gender balance index released by the Official Monetary and Financial Institutions Forum. Not having authority to choose its own board members, the BOJ has never had a woman as governor or deputy governor.

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