BOJ's Iwata says there's no need to raise rates now

AOMORI, Japan, June 22 (Reuters) - Bank of Japan Deputy Governor Kikuo Iwata on Thursday dismissed the need to raise interest rates any time soon, stressing that the economy still needs support from "powerful" monetary easing with inflation distant from the bank's 2 percent target.

Japan's low inflation expectations mean its short-term real interest rate, which is calculated by subtracting inflation expectations from nominal interest rates, remains higher than that of the United States, Iwata said.

"There is absolutely no need to raise interest rates and diminish the degree of monetary easing, which is not that big compared with that of the United States," he said in a speech to business leaders in Aomori, northern Japan.

After three years of heavy asset buying failed to drive up inflation, the BOJ revamped its policy focus last year to one capping long-term interest rates. (Reporting by Leika Kihara; Editing by Chris Gallagher)