Abe selects Toyota executive for BoJ policy board

Prime Minister Shinzo Abe has moved to reinforce the Bank of Japan's fight against deflation by appointing a Toyota executive to its policy board.

Yukitoshi Funo, who once headed Toyota's US division, will join the nine-member BoJ policy board in July if his appointment is approved by parliament.

Although Mr Funo's views on monetary policy are not known, Toyota is one of the biggest beneficiaries of yen weakness brought about by the BoJ's aggressive stimulus.

If approved, he will replace Yoshihisa Morimoto, a former executive at electricity company Tepco, who was part of the four-person minority who voted against additional BoJ easing last October in a 5-4 decision.

Japan's exporters have generally backed the Abenomics stimulus that began in 2012 with monetary easing as its first arrow. Domestic companies such as Tepco, by contrast, have suffered from the higher cost of fuel imports.

The appointment of Mr Funo, while in keeping with the tradition of having industry executives on the BoJ board, may make it easier for governor Haruhiko Kuroda to push for additional monetary easing later in the year.

The Bank of Japan launched a programme of quantitative easing in April 2013, promising to double the country's monetary base, and then shocked financial markets last October by accelerating the rate of purchases to Y80tn ($670bn) a year.

The aggressive monetary easing, aimed at hitting a 2 per cent inflation target, has driven the yen down from Y80 to Y119 against the dollar.

Although inflation has dropped back to zero this year because of sliding oil prices, Mr Kuroda has signalled more easing is only likely if public expectations of future inflation start to fall.

Mr Funo has spent most of his career in Toyota's international operations. He has an MBA from Columbia Business School and ran Toyota Motor Sales, the division that sells the company's cars in the US, from 2005 to 2009.

He left the US just before the scandal over "unwanted acceleration" of Toyota cars erupted at the end of 2009, leading to vehicle recalls, and seriously denting the company's image and profits.

Returning to Japan, he became a member of Toyota's board and bemoaned the "painful" strength of the yen at that time.

If Mr Funo's appointment is approved - likely given the government's strong parliamentary majority - Mr Abe will have appointed five of the nine BoJ board members.

He has installed a series of supporters of his stimulus policy, including Mr Kuroda, and several "reflationist" economists such as deputy governor Kikuo Iwata, and most recently the academic Yutaka Harada.

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