NEWSMAKER-BOJ's Muto: Well-prepared to replace Fukui?

By Hideyuki Sano

TOKYO, March 7 (Reuters) - Toshiro Muto, nominated on Friday as the next governor of Japan's central bank, is a political artist who can blend economics with insider expertise to get things done in the country's powerful government bureaucracy.

But to replace Governor Toshihiko Fukui, who retires on March 19, Muto must find a way to paint that picture convincingly for opposition lawmakers who hold veto power over the job and who fear his close government ties.

Since he arrived at the central bank in 2003, Muto has worked closely with Fukui. Many see him as having been groomed for the top job from the start.

Some say Muto is less hawkish than his boss and he might be more likely to cut interest rates in the face of weaker growth as global fallout grows from the U.S. subprime mortgage crisis.

"Muto may seek to raise rates in the long term, but his policy handling will be pragmatic in the near term," said Naomi Hasegawa, a senior strategist at Mitsubishi UFJ Securities.

Many BOJ officials think Muto's experience as a budget negotiator is a huge boon, as central bank staff are often long on economic theory but short on skills in political manoeuvring.

Muto, 64, spent most of his career at the Ministry of Finance, rising to become vice finance minister, the ministry's top job for a bureaucrat.

A lack of English language skills may be a drawback for his ambition for the top central bank job, however, at a time of global financial stress when coordination between major central banks is increasing.