The Dollar Index is kneejerking higher in the last few minutes following headlines from Nikkei that The Bank of Japan is considering nominating uber-dove Masazumi Wakatabe to a key leadership position.

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JPY immediately jerked lower as Wakatabe is seen as advocating bolder monetary easing. As Nikkei reports, the potential choice of Wakatabe, a longtime proponent of aggressive easing, as deputy governor comes amid speculation that the central bank is looking to start normalizing policy.

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Being considered an uber-dove at The BoJ is quite a feat.

Goldman has asked recently, who are the most likely candidates for deputy governor?

Q1: Who are the leading candidates for BOJ Governor? If Governor Haruhiko Kuroda is re-appointed, is there any precedent?
As reported in the media, the re-appointment of Governor Kuroda could be regarded as the most likely outcome. Prime Minister Shinzo Abe has previously expressed a high opinion of Mr. Kuroda’s performance as governor. Two post-war governors have served two consecutive terms. If Governor Kuroda is re-appointed, this would be the first such instance in 57 years.

Masazumi Wakatabe (Professor, Waseda University)

Mr. Wakatabe is a professor of economics whose main research is in economic history, in particular the global depression in the 1930s and Japanese deflation. He is known as a reflationist and in the past he has advocated for revision of the Bank of Japan Act to include an inflation target. Similar to Mr. Honda, he has publicly expressed his opposition to raising the consumption tax (in a Cabinet Office hearing, November 2014). In a recent Nikkei interview (on December 27, 2017), Mr Wakatabe said that monetary easing should be stronger, substantial enough to absorb possible adverse effects from the consumption tax hike scheduled for 2019, and to further buoy inflation to 2%. His proposed options for further stimulus include raising the inflation target to 3%, from 2% currently, and raising the BOJ's JGB purchase guideline to ¥90 tn a year, from the current ¥80 tn (December 14, 2017 Bloomberg).

He is known as a reflationist and in the past he has advocated for revision of the Bank of Japan Act to include an inflation target. Similar to Mr. Honda, he has publicly expressed his opposition to raising the consumption tax (in a Cabinet Office hearing, November 2014). In a recent Nikkei interview (on December 27, 2017), Mr Wakatabe said that monetary easing should be stronger, substantial enough to absorb possible adverse effects from the consumption tax hike scheduled for 2019, and to further buoy inflation to 2%.