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BOJ's Kuroda says closely watching Trump's policy moves

Bank of Japan (BOJ) Governor Haruhiko Kuroda walks after meeting with Japan's Prime Minister Shinzo Abe at Abe's official residence in Tokyo, Japan January 11, 2017. REUTERS/Toru Hanai

By Martinne Geller

DAVOS, Switzerland (Reuters) - Bank of Japan Governor Haruhiko Kuroda said on Thursday he would closely watch what policies U.S. President-elect Donald Trump implements after he is sworn in.

Speaking to reporters at the World Economic Forum in Davos, Kuroda said tax cuts and infrastructure investment in the United States would boost the growth of the world's largest economy, contributing to the global economy.

Kuroda also shrugged off concerns about protectionism under Trump, saying that it would not spread to such an extent that it would badly hurt the global economy and trade.

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Trump is due to be sworn in as president on Friday.

Kuroda praised Tuesday's speech by British Prime Minister Theresa May, in which she said Britain would quit the EU single market when it leaves the European Union.

"It was good that (May) made the future course clearer," Kuroda said.

How the move will affect the British economy and Japanese companies that operate there will depend on negotiations between Britain and EU on trade and investment relations, Kuroda added.

Turning to Japan, Kuroda said the world's third largest economy was likely growing at around 1.5 percent now and in the next fiscal year, saying the situation had improved significantly over the past four years since Prime Minister Shinzo Abe swept to power in late 2012.

"I have not heard pessimism about Abenomics (at Davos)," Kuroda said, referring to Abe's three-pronged policy comprised of monetary and fiscal stimulus and structural reforms.

"Still, the BOJ's 2 percent price stability goal has not yet been achieved. We will continue with monetary easing to hit the 2 percent target at the earliest possible time," he added.

The BOJ revamped its policy framework in September to one better suited for a long-term battle with deflation, after more than three years of aggressive asset purchases failed to push inflation toward the 2 percent target.

The central bank has stood pat since then, underscoring a market view that it will leave policy steady for the time being unless a severe external shock threatens to derail economic recovery. It holds its next rate review on Jan 30-31.

The BOJ expects consumer prices to rise by 1.5 percent in fiscal 2017 and by 1.7 percent in fiscal 2018, according to forecasts it issued in November.

(Reporting by Martinne Geller in DAVOS and Tetsushi Kajimoto in TOKYO; Writing by Tetsushi Kajimoto; Editing by Gareth Jones)