By Leika Kihara
SENDAI, Japan (Reuters) - Bank of Japan Governor Haruhiko Kuroda said on Thursday the central bank would not hesitate easing monetary policy further if market moves, including a spike in the yen, threatened prospects for achieving its 2 percent inflation target.
Kuroda shrugged off the view that Japan was triggering a currency devaluation war with its ultra-loose monetary policy, saying that its aggressive easing steps were aimed purely at achieving its price goal.
"Like other major advanced nations, the BOJ is conducting monetary policy for the domestic purpose of achieving our inflation target," a view recognized by the global community, Kuroda told reporters in Sendai, northeastern Japan, ahead of a two-day G7 finance leaders' gathering that kicks off on Friday.
Finance leaders of the Group of Seven advanced economies are expected to debate looming risks to the global economy, including a British referendum on whether to exit the European Union that could potentially jolt markets.
Kuroda said he would closely watch the outcome of the June 23 referendum and its market effect, pointing out that a so-called "Brexit" has been identified as a big risk by G20 nations and the International Monetary Fund.
The BOJ held off on expanding stimulus last month despite pushing back the timeframe for achieving its price target, saying that more time was needed to scrutinize the effect of its decision in January to adopt negative interest rates.
"We're now scrutinizing how the effects of our policy steps spread to the economy. That doesn't mean we won't do anything until the effects are clear," Kuroda said.
"If market moves, be it currency rates or something else, threaten achievement of our price target, we won't hesitate taking additional monetary easing steps," he added.
The gathering of G7 finance leaders may expose a rift on issues ranging from currency and fiscal policies within the close-knit group of advanced economies.
Japan has failed to bridge differences with the United States on the yen, with Washington dismissing Tokyo's concerns that recent yen rises are excessive and instead pushing for agreements against currency market interventions.
The BOJ argues that Washington's warnings on Japan's currency policy will not constrain its monetary policy decisions, which are purely focused on hitting its price target.