TOKYO (AFX-ASIA) - Bank of Japan governor Masaru Hayami said the economy will continue to be deadlocked for the time being.
"Japan's economic recovery has stalled since late last year," Hayami told a lower house committee. "Prices will come under further downward pressure from slowing domestic demand."
He added: "Behind the recent Japanese stock price declines, there are concerns over delays in resolving banks' bad loans. The BoJ will take necessary steps if there are major changes at home or abroad." Hayami said the bank will find it "very hard to set a target for prices in the mid- and long-term".
He added: "The BoJ has committed its policy to bringing consumer prices above zero but the policy will not allow for inflation targeting."
Meanwhile, he said the BoJ will continue to discuss its 5 trln yen liquidity provision target at its policy board meetings.
"We need to study the development of the economic and financial situation and discuss the target," Hayami said. "This is not a fixed target."