Tue May 29, 2012 7:34pm EDT
TOKYO May 30 (Reuters) - Bank of Japan Deputy Governor Hirohide Yamaguchi said the central bank will not rule out further monetary easing if risks in Europe materialise and exert strong downward pressure on Japan's economy, the Nikkei business daily reported on Wednesday.
Yamaguchi signalled that Japan will likely achieve the BOJ's 1 percent inflation target without further monetary easing steps, saying the central bank's stimulus measures in February and April have heightened the chance the economy will resume a moderate recovery.
"The decision on whether further easing is necessary would depend on whether the economy and prices undershoot our forecasts, and whether such risks heighten. Monetary policy is not something that is done automatically," he was quoted as saying in an interview.
Yamaguchi said the BOJ will not hesitate to act again if further easing is needed to beat deflation. But he added that monetary policy alone was not enough to overcome price falls, calling for government measures to boost the economy such as deregulation.
The BOJ set a 1 percent inflation target and eased policy in February, and followed up with further stimulus measures in April in a show of its determination to beat deflation.
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