By Leika Kihara
TOKYO (Reuters) - The Bank of Japan is ready to ramp up stimulus, including through a combination of various steps, if the economy loses momentum for hitting its 2 percent inflation target, a senior central bank official said on Tuesday.
Eiji Maeda, the BOJ's executive director overseeing monetary policy, added that any further step must take into account the impact it has not just on the economy but on the banking system.
"If the economy's momentum for achieving our price target is threatened, we are ready to ease monetary policy as necessary," Maeda told parliament.
The BOJ has various means available to ease, such as cutting interest rates, boosting asset purchases and accelerating the pace of money printing, he said.
"The BOJ has actively taken various unconventional steps. We'll continue to take steps as needed, including a combination of them, with an eye on their effects and side-effects," Maeda said.
At a two-day rate review ending on Thursday, the BOJ is widely expected to keep monetary policy steady even as its latest prediction will likely show inflation missing its target through the fiscal year that ends in March 2022.
The BOJ is in a bind. Years of heavy money printing have failed to fire up inflation to its 2 percent target and left it with little ammunition to fight the next recession.
Prolonged easing has also added to pains for regional banks, already facing slumping profits due to an ageing population and an exodus of borrowers to big cities.