BOJ to adjust policy if economy overheats

TOKYO, May 26 (Reuters): Bank of Japan Deputy Governor Kikuo Iwata said on Monday the central bank was ready to adjust monetary policy if the economy overheats and accelerates inflation well above the bank's 2 per cent target for a sustained period.
"The BOJ's current policy intends to prevent not just deflation but inflation from well exceeding 2 per cent, such as to 4 per cent or 5 per cent, for a medium- to long-term period," Iwata told a seminar.
"If the economy overheats and inflation exceeds 2 per cent on a permanent basis, we will adjust policy," he said. "On the other hand, if our price goal is distant and prices don't seem to be approaching the target, we will adjust policy the other way" by expanding stimulus.