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. Last Updated: 07/27/2016

Japan Hires New Central Bank Chief

TOKYO -- Japan on Monday named Toshihiko Fukui, a policy conservative and career central banker, as head of the Bank of Japan, a choice that analysts said could disappoint those hoping for radical action to fix the economy.

The cautious decision, however, was tempered by the tapping two deputy governors who are expected to nudge the central bank toward more aggressive monetary policies to fight deflation.

Kazumasa Iwata of the Cabinet Office -- known as a proponent of unorthodox policies -- and former Vice Finance Minister Toshiro Muto are the government's choices to deputize for Fukui, an official of the ruling Liberal Democratic Party said.

The nomination of Iwata and Muto suggests coordination between the BOJ and the government will go more smoothly and that the Finance Ministry, which favors a more aggressive monetary policy, will have significant influence on the central bank.

Hidenao Nakagawa, chief for parliamentary affairs of the ruling Liberal Democratic Party, who announced the nominations, said they were still subject to approval by parliament.

The closely watched choice of a new governor had been seen as a test of the leadership of Prime Minister Junichiro Koizumi, under fire for his handling of the long-stagnant economy.

It is also key to whether the BOJ will get tough in the fight against the deflation which plagued the world's second biggest economy and squeezed corporate profits for over three years.

Analysts said it was unlikely there would be radical change soon, though the appointment of Iwata pointed to the possibility of a shift over time.

"Fukui does maintain the status quo. And so for those in the market looking for aggressive monetary policy directions from the next governor, they are likely to be disappointed," said Thio Chin Loo, senior currency analyst at BNP Paribas in Singapore.