BOJ's QE already takes into account tax hike pain -Iwata

KITA-KYUSHU, Japan, March 24 Mon Mar 24, 2014 2:38am EDT

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KITA-KYUSHU, Japan, March 24 (Reuters) - Bank of Japan Deputy Governor Kikuo Iwata said on Monday the central bank's current quantitative easing policy already takes into account any possible short-term economic impact after an increase in the sales tax rate in April.

"The biggest worry now is that economic growth will slump in the second quarter, after accelerating in the first quarter due to a rush in spending" ahead of the sales tax hike to 8 percent from 5 percent in April, Iwata told a seminar in the southern Japanese city of Kita-Kyushu.

"The BOJ, when it deployed the current (ultra-easy) monetary policy, took into account whether (the stimulus) was enough for the economy to recover after the slump," he said, dispelling market speculation the central bank will ease further soon to cushion the pain from the sales tax hike. (Reporting by Leika Kihara; Editing by Dominic Lau)

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