BOJ's Shirakawa: high growth stretch can cause imbalances

TOKYO Mon Oct 8, 2012 8:18pm EDT

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TOKYO Oct 9 (Reuters) - Bank of Japan Governor Masaaki Shirakawa said on Tuesday attempts to maintain high growth beyond a country's potential could cause various imbalances.

"The most important task for policy-makers is to achieve a smooth transition from high growth to stable growth," Shirakawa said in a speech to participants of a tour the central bank organised for delegates visiting Tokyo for the International Monetary Fund meetings.

In a two-day policy review that ended last Friday, the BOJ resisted political pressure for action and kept monetary policy steady, but left the door open to more monetary easing later this month by warning of looming risks to the outlook for the world's third-largest economy.

Shirakawa said at a news conference after the meeting that the central bank will not link the timing of further monetary easing automatically to its price outlook, signalling that falling short of its 1 percent inflation target would not guarantee immediate policy action.

The International Monetary Fund said on Tuesday that the BOJ's monetary easing last month should support economic growth and help end deflation, but more easing may be needed to hit the bank's 1 percent inflation target.

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