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BOJ's Nakaso says central bank has tools, expertise to exit easy policy

[TOKYO] Bank of Japan deputy governor Hiroshi Nakaso said on Wednesday the central bank has the necessary tools and expertise to engineer a smooth exit from ultra-easy monetary policy.

Mr Nakaso, a career central banker with experience ending the BOJ's previous quantitative easing programme in 2006, said the BOJ has various ways to mop up liquidity from markets and whittle down its huge balance sheet.

"What tools we will use and in what sequence would depend on economic, price and financial conditions at the time," he said in a seminar in Tokyo.

The timing of an exit from ultra-easy policy would depend on market sentiment, as communication with market players is crucial for withdrawing monetary stimulus smoothly, he said.

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"An exit from quantitative and qualitative easing (QQE) is very challenging. But I'm confident the BOJ can do this with its various tools, experience, expertise and appropriate communication with markets," Mr Nakaso said.

He said the BOJ could learn from the US Federal Reserve's efforts to dial back stimulus.