* BOJ balance sheet on par with Fed, more than 90 pct of Japan GDP
* Increase in JGB holding slows to Y71 trln, below Y80 trln target
* Huge balance sheet to make future exit difficult (Adds detail on exit strategy, board member comment)
By Hideyuki Sano
TOKYO, June 2 (Reuters) - The Bank of Japan hit a new milestone as its balance sheet topped 500 trillion yen ($4.48 trillion), roughly the same size as that of the Federal Reserve, having more than tripled since it started aggressive stimulus in 2013.
The massive size of the BOJ's money printing, however, has barely moved it nearer to its ultimate policy goal of lifting inflation to 2 percent, highlighting the difficulty the central bank is facing as the pace of its bond buying appears unsustainable.
The BOJ's bloated balance sheet would also complicate a future withdrawal of stimulus as any rise in bond yields sparked by expectations of monetary tightening could expose its huge bond holdings to losses, some analysts say.
Data from the BOJ showed its total assets rose to 500.8 trillion yen at the end of May, compared to 425.7 trillion yen a year earlier. It was 164.8 trillion yen when Governor Haruhiko Kuroda took the helm in March 2013.
The BOJ's balance sheet almost matches the $4.51 trillion held by the U.S. Federal Reserve and amounts to more than 90 percent of Japan's gross domestic product (GDP), by far the highest ratio among the world's top four central banks.
Nonetheless even with years of massive liquidity support and signs of labour shortages in recent months, inflation stood at 0.3 percent and is expected to remain well below 2 percent for the foreseeable future.
Slowly improving economic growth has been largely reliant on a recovery in exports and global demand, with domestic consumer spending remaining stubbornly weak.
"At the moment, the world's economy is in pretty good shape. As long as they have that tailwind, maybe there will be some progress little by little. But if the wind stops, there's no traction," said Takehiro Noguchi, senior economist at Mizuho Research Institute.
"In a way, the BOJ is a like a yacht without an engine. It can advance only when there is a wind."
BOND-BUYING LIMITS
After three years of heavy asset buying failed to drive up inflation, the BOJ revamped its policy framework last year to one capping long-term interest rates from that targeting the pace of money printing.
BOJ chief Kuroda has repeatedly said the central bank still had plenty of bonds to buy, and that it was premature to openly debate an exit strategy from the stimulus programme.