* U.S. fiscal woes among risks to Japan outlook - deputy gov
* Iwata - Any risks to BOJ's price goal would be from
* Japan's economy recovering, on track to meet price goal
By Leika Kihara
TOKYO, Oct 18 Slowing global growth and U.S.
fiscal woes are among key risks to Japan's economy, the Bank of
Japan's deputy governor said, stressing the central bank's
readiness to ease monetary policy further if its 2 percent
inflation target comes under threat.
But Kikuo Iwata said that for now, Japan's economy is on
track for a steady recovery and will gradually see price
increases accelerate toward 2 percent, thanks in part to a
fiscal stimulus package planned by the government.
"If, in light of global uncertainties, the achievement of
our 2 percent inflation target becomes difficult, it's necessary
to take further policy action," Iwata said at an university
symposium in Tokyo on Friday.
Iwata, a former academic known as a strong advocate of
reflationary policies, played a key role in crafting the BOJ's
monetary stimulus framework put in place in April. The bank aims
to double the country's base money to raise the inflation rate
to 2 percent in roughly two years.
Japan's economy is moving in line with the BOJ's projection
of a moderate recovery, with personal consumption acting as a
key driver of growth and companies gradually increasing capital
expenditure, he said.
Core consumer prices rose 0.8 percent in August from a year
earlier, the fastest pace of growth in nearly five years,
although most of the increase was due to rising energy prices
and a weak yen that inflated the cost of raw material imports.
But the global economic outlook has deteriorated compared
with when the BOJ launched its intense stimulus in April, Iwata
said, warning that any risks which could threaten achievement of
the 2 percent inflation target would be from overseas.
He said that uncertainty over U.S. fiscal policy "will
continue to serve as a big constraint and downside risk" to U.S.
growth. Slowing Asian growth could also weigh on Japanese
exports, the deputy governor added.
'SOME FORM OF ACTION'
"If such overseas risks become big enough to make our
current monetary stimulus insufficient to achieve 2 percent
inflation, we're ready to take some form of action," Iwata said.
He added, however, the pain for Japan's economy from the
overseas slowdown will be somewhat offset by the government's 5
trillion yen ($51 billion) fiscal stimulus package aimed at
cushioning the hit from next year's sales tax hike.
Iwata also said the decision on whether more stimulus is
needed to get 2 percent inflation would be made from a long-term
perspective. He said he could not comment on what kind of steps
would be considered if the BOJ were to act further.
Every month, the BOJ now buys roughly 7 trillion yen in
government bonds, as well as risky assets, to pump money into
the economy under its intense monetary stimulus framework
launched in April. It has stood pat on monetary policy since
In a separate speech on Friday, BOJ Governor Haruhiko Kuroda
said the effects of the bank's monetary stimulus are firmly
emerging on economic activity.