Muto leads as Japan PM close to choosing nominee for BOJ chief

Sun Feb 17, 2013 8:06pm EST
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By Leika Kihara and Yoshifumi Takemoto

TOKYO (Reuters) - Former top financial bureaucrat Toshiro Muto is the leading candidate to become Japan's next central bank governor with Prime Minister Shinzo Abe to pick a nominee as early as this week, sources close to the process told Reuters.

The choice of Muto, 69, would suggest the Bank of Japan will intensify stimulus efforts to reflate the economy, which has struggled with deflation for years, but refrain from the more radical measures advocated by other candidates.

Some policymakers and government officials worry that radical measures could unsettle markets. A sharp yen decline since Abe started pushing for bold BOJ measures has already sparked global criticism of Japan's policies.

"The choice of Muto appears to be gaining momentum," said one of the sources familiar with the selection process. Still, Muto's selection is not a done deal given the political maneuvering needed to ensure parliamentary approval.

Abe and his advisers have cut the field of final candidates to two or three and have excluded academic and private-sector economists in favor of those with bureaucratic experience, said several people familiar with the process.

They declined to be identified because the decision is still pending and discussions remain private.

Muto has long been considered a leading candidate to replace Masaaki Shirakawa, 63, who steps down with his two deputies on March 19.

He has close ties with ruling party lawmakers and past experience steering fiscal and monetary policies, having moved up the ranks of the powerful finance ministry and serving as deputy BOJ governor between 2003 and 2008.   Continued...

Daiwa Institute of Research Chairman and former Bank of Japan Deputy Governor Toshiro Muto poses after an interview with Reuters in Tokyo September 11, 2012. REUTERS/Yuriko Nakao