OKAYAMA, Japan (Reuters) - The Bank of Japan is ready to implement additional monetary easing as necessary to help the economy recover and escape deflation, a deputy governor said on Wednesday, giving the strongest signal for further stimulus since its surprise February action.
Kiyohiko Nishimura, speaking nine days before the BOJ's rate review, also said global uncertainties such as the unresolved debt crisis in Europe are the BOJ's prime concern as it examines its projection for a gradual recovery in the domestic economy.
"The BOJ is committed to implementing additional easing measures, if deemed necessary," Nishimura said in a speech to business leaders in Okayama, western Japan.
"It is vital to make efforts both to support the recent momentum toward Japan's economic recovery and to strengthen growth potential for overcoming deflation," he said, adding that the BOJ is "actively" taking steps to achieve its 1 percent inflation goal.
Nishimura, one of the BOJ's two deputy governors, is regarded as among the board's more pessimistic members about Japan's economic outlook. His remarks provided the strongest signal toward further easing since the BOJ surprised markets in February by boosting its asset-buying program and setting the inflation target.
Sources have said the BOJ will consider easing monetary policy at its next policy review on April 27 by boosting government bond purchases under its 65 trillion yen ($804 billion) asset-buying and loan program as it battles to nudge consumer prices towards its 1 percent goal.
But Nishimura stopped short of elaborating on specific steps and only said those would depend on the outlook for the economy and prices as the BOJ - for its twice-yearly outlook report on April 27 - makes a thorough review of long-term economic and price forecasts for up to the year ending in March 2014.
Nishimura said "The risk factor that the bank is most concerned with is uncertainties regarding the global economy, which include the prospects for the European debt problem and global commodity prices."
"The sustainability of the ongoing U.S. recovery requires careful watch."
The BOJ may slightly raise its consumer price forecasts in the report to take account of oil price increases, although it pays little heed to such technical factors in determining whether prices are stabilizing.
Nishimura also said the BOJ will continue to make further efforts to improve its communication with markets.
A former university professor and a statistics expert, Nishimura joined the board in 2005 and was appointed a deputy governor in March 2008.
He surprised markets by proposing unsuccessfully in April last year that the BOJ boost its asset purchases. He has voted with the majority since then.
($1 = 80.7700 Japanese yen)
Editing by Joseph Radford and Richard Borsuk