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Japan's govt will vow to end deflation with bold monetary, flexible fiscal policy -draft

A Japanese flag flutters atop the Bank of Japan building in Tokyo

By Takaya Yamaguchi and Yoshifumi Takemoto

TOKYO (Reuters) - Japan's government will pledge to pull the economy out of deflation through bold monetary policy, flexible fiscal policy and a growth strategy, according to a draft outline of its long-term economic policy platform obtained by Reuters on Friday.

"The government hopes the Bank of Japan achieves its 2% inflation target in a stable, sustained fashion accompanied by wage growth," the draft outline said.

Coupled with measures to boost private investment for innovation and other structural measures, the government will "strive to eradicate Japan's long-held deflationary mindset and create a perception among the public that Japan will not return to deflation," the draft said.

The platform, which serves as a guideline for the government's long-term economic policymaking, is expected to be finalised at a cabinet meeting on June 16.

It will be the first to be compiled since BOJ Governor Kazuo Ueda took up the post in April.

The government's focus on putting a sustained end to deflation may underscore its hope for the BOJ to keep supporting the fragile economic recovery with ultra-loose monetary policy.

(Reporting by Takaya Yamaguchi and Yoshifumi Takemoto; Writing by Leika Kihara; Editing by Susan Fenton)