By Leika Kihara and Yuko Yoshikawa
TOKYO (Reuters) - Japanese Economics Minister Akira Amari warned that it would be premature for the Bank of Japan to consider an exit strategy from its massive stimulus program, voicing hope instead for further monetary easing if achievement of its inflation goal falls behind schedule.
Amari also said that while Japan appears to be emerging from years of persistent price declines, it was too early to formally declare a sustained end to deflation with the economic recovery still vulnerable to external shocks.
"The BOJ has expressed strong determination that it won't hesitate to take further action if (the timing for meeting the inflation target) is not on schedule," Amari said in an interview at a Reuters Newsmaker event on Friday.
"If the BOJ judges that it's not on schedule, I think the central bank will decide on its own (to act)," he said.
The central bank has kept policy unchanged since deploying an intense burst of monetary stimulus in April last year, when it pledged to double base money via aggressive asset purchases to accelerate inflation to 2 percent in roughly two years.
With Japan only halfway to meeting that 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.
But BOJ officials have become more comfortable speaking about the chance of a future exit from quantitative easing (QE). They have also shown no intention of expanding stimulus any time soon on their conviction that Japan is making steady progress in meeting the price goal.
Amari said Japan was no longer suffering from price declines, with inflation steadily accelerating. But he warned against complacency, saying he wanted more evidence that the economic recovery is strong enough to sustainably push up prices.
"The BOJ is striving to achieve 2 percent inflation in roughly two years. We can't declare that deflation has been eradicated unless inflation stays at that level and there are assurances it won't ease (back to deflation) even if the economy is hit by some external shocks," he said.
Core consumer inflation hit 1.4 percent in the year to May, excluding the effect of an April 1 sales tax hike. The BOJ expects inflation to slow to near 1 percent in coming months as the boost from a weak yen fades, before accelerating toward 2 percent through early next year.
Many private economists still expect the BOJ's next move to be an expansion of, not an exit from, stimulus, as they doubt the price goal can be met within the bank's target timeframe.