Japan's Abe says has met key goal on jobs, distances himself from BOJ inflation target

By Leika Kihara

TOKYO (Reuters) - Japanese Prime Minister Shinzo Abe said on Thursday his key economic policy goal has been fulfilled, with job losses at record lows, signalling that he was no longer persisting on achieving the central bank's elusive 2 percent inflation target.

Abe said the purpose of the Bank of Japan's inflation target was to take measures to push price growth, so that more jobs would be created.

"The biggest goal of our macro-economic policy has been fulfilled as a result of measures taken by the government and the BOJ to achieve 2 percent inflation," Abe told a news conference.

"In that sense, we've succeeded in hitting the arrows" of the 'Abenomics' mix of fiscal, monetary and structural measures to pull Japan's economy out of stagnation, he said.

Abe made the comments after winning a ruling party leadership race on Thursday, which put him on course to become the longest-serving prime minister in Japan.

The remarks were in contrast to those made five years ago, when he appointed BOJ Governor Haruhiko Kuroda and stressed that the central bank must do whatever it takes to accelerate inflation to its 2 percent target.

Years of heavy money printing have helped reflate growth but failed to fire up inflation to the BOJ's target.

With prolonged easing straining Japan's banking sector, even some within the central bank have publicly warned of the rising cost and diminishing returns of their policy.

Politicians, who once pressured the BOJ to ramp up stimulus to beat deflation, have sent signals that they are becoming more amenable to the idea of a future exit from easy policy.

Abe said last week the BOJ's ultra-easy policy should not last forever, signalling his hope of laying the path toward an exit from a radical stimulus programme.

"We must pave the way for ending deflation," Abe told the briefing. "We must do this in the next three years."

(Additional reporting by Tetsushi Kajimoto; Editing by Chris Gallagher and Kim Coghill)