Acting Bank of Japan Governor Masaaki Shirakawa said on Friday that dealing with global market turmoil was his top priority, but warned those expecting a cut in interest rates that he has no preconceptions on where to take monetary policy. Japan has entrusted the BOJ to Shirakawa, its first temporary governor in more than 80 years, as central banks work together to combat a credit crisis and calm gyrating markets. “To appropriately deal with the turmoil in international financial markets triggered by the US subprime loan problems is the most important task,” Shirakawa told reporters on his first news conference in the job. Shirakawa, a former BOJ official returning to the central bank as a deputy governor, landed in the hot seat after parliament twice failed to agree on a replacement for the previous governor before he retired on Wednesday. The failure to find a new permanent leader for the central bank in the world's No.2 economy has raised new doubts about the leadership of Prime Minister Yasuo Fukuda, whose popularity was already sliding because of policy deadlocks in parliament. Investors have priced in around a 30 percent chance of a rate cut by the BOJ by June and Goldman Sachs said this week a cut may come as early as Shirakawa's first rate review on April 8-9. But other economists, noting Japanese rates are already at rock bottom, are not so sure the BOJ will cut its main policy rate from 0.5 percent and Shirakawa also warned against any assumptions. “When the economy changes, it changes very fast in both directions. So we shouldn't have any preconceptions on future monetary policy,” he said, reaffirming the central bank's forecast that the current slowdown did not change the trend of gradual growth. “The economy is slowing down and it will slow down for the time being but it will start expanding moderately after that, although I don't know exactly when that will happen,” he said. “That is the basic scenario. But at the moment there's also much uncertainty.” Shirakawa, working in comparative obscurity as a university professor until his appointment, returns to the central bank after a gap of more than a year. His nomination left many analysts struggling to classify his views on interest rates. An avid bird watcher, the new acting governor rejected labelling as either a monetary policy hawk or dove. __
