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By Leika Kihara
TOKYO (Reuters) -With a cabinet reshuffle out of the way, Prime Minister Fumio Kishida's search for the next Bank of Japan (BOJ) governor will intensify in coming months with a small but possible chance of a dark horse getting the job.
Kishida gave some key posts to lawmakers loyal to deceased premier Shinzo Abe in Wednesday's reshuffled cabinet, a sign he is not turning his back on proponents of aggressive monetary easing that was a key pillar of Abe's "Abenomics" stimulus policies.
However, as years of ultra-low interest rates strain bank profits and limit scope for further easing, Kishida likely won't chose an advocate of radical stimulus. Instead, he is seen opting for a safe pair of hands who can engineer an orderly exit, if any, from massive stimulus, analysts say.
That leaves former BOJ deputy governor Hiroshi Nakaso and incumbent deputy Masayoshi Amamiya as strong candidates to replace Governor Haruhiko Kuroda when his second, five-year term ends in April, analysts say.
With Finance Minister Shunichi Suzuki having retained his post, many analysts say the cabinet reshuffle won't alter the dominant market view that those two remain closest to the BOJ helm.
"Looking at his personnel decisions, Kishida continues to pay heed to conservatives and proponents of Abe's policies," said Toru Suehiro, chief economist at Daiwa Securities.
"His priority is to strike a balance among ruling party factions. If this trend were to continue, Amamiya or Nakaso will remain top candidates as next BOJ governor," he said.
But there is a small chance, which is increasingly talked about in political and financial circles, that Kishida may choose a dark horse to distance himself from Abenomics, which has failed to produce solid, sustainable growth in the world's third-largest economy.
"Amamiya and Nakaso both served under Kuroda, and so might find it hard to reverse the BOJ's current massive stimulus," said a source familiar with the selection process.
"Someone from outside the BOJ might be better placed to overhaul yield curve control (in the bond market)," the official said, a view echoed by another source close to the administration.
If so, former finance ministry officials are seen as possible candidates. Having ex-finance bureaucrats at the top or deputy posts will help the BOJ work closely with the ministry, which is in charge of debt issuance, to avoid any damaging spike in long-term interest rates, the sources said.
Kuroda is among former finance ministry officials who became BOJ governor with experience in currency diplomacy and tax affairs.