COME Shirakawa warns economic prospects to the "very serious" (Reuters) Japan

TOKYO (Reuters) - the Bank of Japan Governor Masaaki Shirakawa said Saturday that the economic prospects of the country were very serious and that the Central Bank will take appropriate measures to support the economy.

But he offered a few clues as to if and when the Bank of the Japan would be expanding its system of purchase of goods, only to say that his next political step will depend on economic conditions at the time.

Shirakawa "Bank of the Japan sees the Outlook for the economy of the Japan as very serious", said at a meeting of the lower House of the Parliament of the Financial Committee.

"We would like to take necessary appropriate policy measures while the economy and prices, taking into account that the uncertainty about the prospects of monitoring is high," he said.

A legislator asked him if the Bank of the Japan would consider buying more government bonds to support the economy, Shirakawa said only: "we would like to consider seriously what would be the desirable step to take."

The Bank of the Japan kept unchanged monetary policy Thursday, even though it lowered its growth forecasts for the current fiscal year, which began in April and has warned of uncertainties about the magnitude of the devastating damage of the month last earthquake would impose on the economy.

Shirakawa reiterated that with just to extend its asset buying scheme days after the earthquake on 11 March, the Bank of the Japan preferred to spend more time to consider the implications of the step on the economy.

But he also rejected the possibility of easing monetary policy further if the damage caused by the earthquake has proven more than expected, noting that the Central Bank has focused on the risks to the decline in growth for the moment.

A sign that some members of the Bank of Japan were more cautious with regard to economic prospects that Shirakawa, Deputy Governor Kiyohiko Nishimura proposed Thursday to broaden the assets of the Central Bank buys the regime by 5 billion yen ($62 billion).

While the proposal was in the minority by the Council, some market players said it may be a sign that the Bank of the Japan can relax the policy as early as next month.

Japan is facing the worst crisis since the second world war after the 9.0 magnitude earthquake and subsequent tsunami devastated the northeast coast last month.

Reflecting the impact economic, exit the factory fell to a record monthly pace in March, spending households has declined to a record annual rate and another private survey showed manufacturing activity has languished in a two year low.

The Bank of the Japan facilitated political days after the earthquake by doubling to 10 billion yen funds put aside for the purchase of a range of financial assets, such as the corporate debt and Treasury bills.

If the next Central Bank to ease policy, the more likely step would be to extend the schema once again, say sources familiar with the thinking of the Bank of the Japan.

Apart from the obligations of the Government that it purchases under the asset purchase plan, the Central Bank buys 21.6 billion yen worth of bonds long term of the Government of the market each year.

Some legislators have called the enormous costs on the Bank of the Japan to buy government bonds in the market, or even directly, agree them to help fund the Government for the reconstruction.