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By Leika Kihara
TOKYO, July 8 The Bank of Japan already has an
"extensive" range of instruments to engineer an exit from its
massive stimulus programme, Deputy Governor Hiroshi Nakaso said
But Nakaso stressed that it was premature to discuss
specific measures to exit the central bank's "quantitative and
qualitative easing" (QQE) programme.
"What I would like to emphasise is that the bank is still in
the midst of striving to achieve the price stability target of 2
percent at the earliest possible time, and exit policies should
be designed depending on the then-prevailing economic and
inflation situation," he told a seminar.
Under its massive stimulus programme deployed in April last
year, the BOJ has pledged to double base money via aggressive
asset purchases to achieve its 2 percent inflation target in
roughly two years to help revive the long-moribund economy.
With Japan only halfway to meeting its price target, the BOJ
is set to keep its stimulus plan intact well into next year, in
contrast to its U.S. and British counterparts, which are
starting to telegraph plans for interest rate hikes.
Nakaso said that while the BOJ is striving to achieve its
price target in two years, that did not mean it will end QQE
strictly in two years because its aim is to achieve 2 percent
inflation in a stable manner.
He also said consumer inflation is likely to slow toward the
summer but accelerate thereafter and reach about 2 percent "in
or around" the next fiscal year beginning in April 2015.
"The Bank will ... continue with QQE, aiming to achieve the
price stability target, as long as it is necessary for
maintaining that target in a stable manner," he said.
Core consumer inflation hit 1.4 percent in the year to May,
excluding the effect of a sales tax hike in April.
The BOJ expects inflation to slow to around 1 percent in
coming months as the boost from a weak yen, which inflates
import costs, begins to fade, but will then accelerate again
late this year.
Many economists, however, are sceptical that inflation will
continue to pick up much beyond current levels.
(Additional reporting by Stanley White; Editing by Edmund
Klamann & Kim Coghill)