RTTNews - Wednesday, Deputy Governor of the Bank of Japan Hirohide Yamaguchi said in a speech in Hakodate that deciding when and how exceptional policies should be withdrawn is an important policy issue. The central bank should plan an exit in a way that market participants can anticipate and not bring about unnecessary market disturbances.

With regard to future developments in corporate financing, Yamaguchi said there remains uncertainty about whether the signs of improvement would become widespread. So the bank would continue to examine developments in corporate financing.

Yamaguchi added that the central bank's baseline scenario projects that the rate of decline in prices will accelerate temporarily, but will moderate from the latter half of fiscal 2009 against the backdrop of a recovery of economic activity. Therefore, Yamaguchi said the Bank thinks it unlikely at present that prices will continue to decline and thereby lead Japan's economy into a deflationary spiral.

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