/www.bloomberg.com/ By Mayumi Otsuma and Tomomi Sekioka with reporting by Hideki Asai and Kyoko Shimodoi
Tokyo, Feb. 3 (Bloomberg) -- Prime Minister Junichiro Koizumi denied a magazine report that Nobuyuki Nakahara, a former board member of the Bank of Japan, would become the central bank's next governor.
``Today there was another incorrect report about the nomination of the next BOJ head,'' Koizumi told reporters at the prime minister's residence. ``Nothing has been decided.''
Kyodo Weekly reported that Nakahara would replace Masaru Hayami as the next governor of the Bank of Japan when Hayami's five-year term ends on March 19. The article cited ruling Liberal Democratic Party legislators it didn't name.
Nakahara, 67, has advocated a so-called inflation target to end four years of falling prices that have sapped the world's No. 2 economy. Under an inflation target, which Hayami has opposed, the bank would set a goal for an increase in prices in a specified period of time and pump money into the economy until the goal is met.
The yen, which weakened on the report, pared its losses after Koizumi's remarks. The yen was at 120.25 to the dollar at 2:15 p.m. in Tokyo, compared with 119.87 late Friday in New York. It fell as low as 120.91 to the dollar.
Some ministers and officials of Koizumi's Liberal Democratic Party have said they want the next central bank chief to adopt an inflation target.
Nakahara's four-year term as a member of the central bank's nine-person policy-setting board ended last April. He is now a member of a Financial Services Agency advisory board that is supervising government plans to push for write-offs of an estimated 52.4 trillion yen ($434 billion) of bad loans at Japan's banks.
Reserves
Nakahara's other proposals in the past have included urging the central bank to print more money, purchase more government bonds, and buy foreign bonds to increase Japan's money supply.
The central bank has resisted most of those suggestions. Even so, in November, Hayami and his colleagues decided to increase the amount of reserves they make available to commercial banks to the upper limit of 20 trillion yen, eight months after Nakahara called for the move.
Nakahara also suggested the bank nudge Japan's consumer price growth up to a level of between 1 percent and 3 percent a year by the fourth quarter of 2003. The country's main consumer price index hasn't risen since April 1998.
The Kyodo Weekly article also said Finance Minister Masajuro Shiokawa supports Toshihiko Fukui, a former deputy chief of the central bank, as a candidate for governor.
Shiokawa told reporters he hadn't heard of any report that Nakahara would be named.
``The nomination of a new central bank chief is totally Prime Minister Koizumi's domain, and I will not meddle in it,'' Shiokawa said.