Bank of Japan Gov. Masaru Hayami said Wednesday there is no immediate need to increase the central bank's outright purchases of long-term government bonds to boost liquidity in the money market.
"It is not necessary now," Hayami said at a regularly scheduled news conference.
The government is thinking of asking the BOJ to increase its outright purchases to 1 trillion yen from the current 800 billion yen per month as a measure to combat deflation.
Hayami also said prices will not rise without economic growth, indicating that boosting private demand through structural reforms is essential to end deflation.
The BOJ and the government agree that tackling deflation is critical, he said, and the central bank will act to support economic structural reform efforts.
But he indicated the central bank will not immediately adopt additional monetary easing steps.
"Under the current economic circumstances, additional easing will have no impact on the economy," Hayami said.
He added the BOJ will take further measures to boost liquidity in case the stability of Japan's financial system is questioned.
Hayami said a U.S. rating agency's decision to review Japan's sovereign rating for possible downgrade stems from its high ratio of government debt to gross domestic product.
Moody's "may be casting doubt on the sustainability of Japan's fiscal situation," Hayami said.