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BOJ can't exit stimulus when inflation below 1 pct - BOJ Gov candidate Ito

FILE PHOTO: A Japanese flag flutters atop the Bank of Japan building under construction in Tokyo, Japan, September 21, 2017. REUTERS/Toru Hanai/File Photo
FILE PHOTO: A Japanese flag flutters atop the Bank of Japan building under construction in Tokyo, Japan, September 21, 2017. REUTERS/Toru Hanai/File Photo

TOKYO (Reuters) - The Bank of Japan likely won't be able to exit its massive stimulus programme while inflation is hovering below 1 percent, Takatoshi Ito, an academic who is a potential candidate to become the next BOJ governor, said on Wednesday.

"What's important is for inflation to accelerate, which would give (the BOJ) quite some flexibility in guiding monetary policy," Ito, a Columbia University professor, told a seminar in Tokyo.

The BOJ has already laid the groundwork for normalising monetary policy by revamping its policy framework last September and gradually slowing its bond purchases, though raising its yield targets would be some time away, he said.

"While inflation is hovering below 1 percent, it would be hard for the BOJ to exit (from ultra-loose monetary policy)," said Ito, who is considered a candidate to succeed BOJ Governor Haruhiko Kuroda when his five-year term ends in April next year.

(Reporting by Leika Kihara and Chris Gallagher; Editing by Minami Funakoshi)