RPT-BOJ's Iwata says will adjust policy if economy overheats

Mon May 26, 2014 3:21am EDT

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TOKYO May 26 (Reuters) - Bank of Japan Deputy Governor Kikuo Iwata said on Monday the central bank was ready to adjust monetary policy if the economy overheats and accelerates inflation well above the bank's 2 percent target for a sustained period.

"The BOJ's current policy intends to prevent not just deflation but inflation from well exceeding 2 percent, such as to 4 percent or 5 percent, for a medium- to long-term period," Iwata told a seminar.

"If the economy overheats and inflation exceeds 2 percent on a permanent basis, we will adjust policy," he said. "On the other hand, if our price goal is distant and prices don't seem to be approaching the target, we will adjust policy the other way" by expanding stimulus. (Reporting by Leika Kihara and Stanley White; Editing by Chris Gallagher)

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