UPDATE 1-BOJ's Kuroda says monetary policy has 'some limits'

* Size of money printing ultimately drives prices - Kuroda

* Adds feels responsible for missing inflation target

* Warns Japan’s fiscal situation ‘extremely serious’ (Recasts with Kuroda’s quotes, background on BOJ policy)

TOKYO, Jan 26 (Reuters) - Bank of Japan Governor Haruhiko Kuroda said on Tuesday there were limits to what monetary policy can do, as years of massive money printing have failed to drive prices sustainably higher.

His comments were a rare acknowledgement of the difficulty the BOJ faces in meeting its 2% inflation goal, and underscore the struggle major central banks have in fending off shocks such as the coronavirus pandemic with a dwindling tool-kit.

Kuroda said central banks were ultimately responsible for preventing excessive inflation or deflation, as the size of money printing affects price moves in the long run.

“But when you look at what happened, the BOJ deployed a maximum amount of stimulus and yet, we have not achieved our 2% inflation target. This shows that monetary policy does have some limits,” he told parliament on Tuesday.

“As with other central banks, we feel responsible for missing our price goal,” he added.

Kuroda also warned that Japan must enhance the sustainability of its finances as its fiscal situation was in an “extremely serious state”.

He did not provide details on how to fix the country’s finances, saying only that fiscal policy fell within the jurisdiction of the government and elected lawmakers.

The government and the BOJ have cooperated in deploying a mix of massive fiscal and monetary stimulus programmes to cushion the economic blow from the pandemic.

But critics warn that years of ultra-low interest rates, made possible by the BOJ’s money printing, have brewed complacency among lawmakers and allowed them to delay much needed fiscal reform to rein in Japan’s huge public debt.

Kuroda had pledged in 2013 to accelerate inflation to 2% in two years. The BOJ was forced however to shift to a policy targeting interest rates in 2016, after years of heavy asset buying failed to drive prices higher.

The economic damage from the pandemic has heightened fears of deflation with core consumer prices falling 1.0% in December from a year earlier, the fastest pace of decline in a decade. (Reporting by Leika Kihara; Editing by Jacqueline Wong)