*
Risk of premature exit bigger than delay in ending
stimulus
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Japan's inflation situation 'quite different' from other
nations
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Comments reduce chance of near-term overhaul of yield
control
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New Gov Ueda makes international debut with G7 attendance
(Adds Ueda's comment on bank woes, background on economy)
By Leika Kihara and David Lawder
WASHINGTON, April 12 (Reuters) - Bank of Japan Governor
Kazuo Ueda said on Wednesday the central bank must pay more
attention to the risk of failing to meet its 2% inflation target
with premature monetary tightening, rather than being behind the
curve in combating too-high price growth.
While other countries are experiencing elevated inflation,
the situation is "quite different" in Japan, Ueda said in
Japan's G7 chair briefing with Finance Minister Shunichi Suzuki.
"I don't deny it as a possibility," Ueda said when asked by
a reporter whether Japan could risk being behind the curve in
addressing the risk of too-high inflation by keeping monetary
policy ultra-loose for a prolonged period.
"But the BOJ must pay more attention to (the risk of)
failing to achieve 2% inflation" with a premature end to easy
policy, rather than that of a delay in raising interest rates,
said Ueda, who is in Washington for his debut international
meeting since assuming the post on Sunday.
Ueda said he explained to his counterparts at the Group of
Seven (G7) meeting that the BOJ will continue its monetary
easing until its 2% inflation target was met in a stable and
sustainable fashion.
Japan remains an outlier among a global wave of central
banks tightening monetary policy to combat soaring prices, as
the BOJ focuses on supporting a fragile economy until durable
increases in inflation and wages come into sight.
Markets, however, have been simmering with speculation the
BOJ will phase out or end its controversial bond yield control
policy under Ueda, due to the rising side-effects of prolonged
easing such as the hit to bank profits.
Ueda's latest remarks, which follow reassurances he made on
Monday to maintain yield curve control for now, suggest the BOJ
may not overhaul the policy at this month's meeting.
At Wednesday's briefing, Ueda said G7 policymakers have
taken appropriate steps to prevent contagion from recent U.S.
and European banking-sector woes, though they needed to be
vigilant to "elevated uncertainties."
"The Basel 3 (bank regulations) have not necessarily been
implemented completely," he said. "We need to make sure these
regulations are fully implemented."
(Reporting by Leika Kihara and David Lawder; Editing by Leslie
Adler, Jacqueline Wong and Sam Holmes)
