By Leika Kihara and Stanley White
TOKYO (Reuters) - Japanese Finance Minister Taro Aso said on Tuesday the central bank could give itself more flexibility in how it defines its 2 percent inflation target.
"I don't think anyone in the general public is angry about the fact that inflation hasn't reached 2 percent," Aso told parliament, when asked his view on whether the Bank of Japan should persist in meeting the elusive price goal.
Other major central banks, such as the European Central Bank, are more flexible about their inflation targets with room for some allowance, Aso said. "I believe (the BOJ) could be a bit more flexible too," he added.
BOJ Deputy Governor Masayoshi Amamiya, however, told the same parliament committee that the central bank's priority was to achieve its 2 percent inflation target.
"It's important and necessary for the BOJ to communicate to markets its strategy for exiting ultra-loose monetary policy," Amamiya said.
"But debate on an exit must begin only when achievement of our price target comes into sight."
The BOJ faces a dilemma. Years of heavy money printing have dried up market liquidity and hurt commercial banks' profits, stoking concern over the rising risks of prolonged easing.
And yet, subdued inflation has left the BOJ well behind other major central banks in dialing back crisis-mode policies, leaving it with little ammunition to battle the next recession.
The BOJ is set to maintain its massive stimulus program and warn of heightening overseas risks at next week's rate review, sources have told Reuters.