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UPDATE 1-BOJ's Kataoka warns against premature exit from easy policy

* More easing boosts capex, helps fiscal spending - Kataoka

* Premature exit could push Japan back into deflation

* Sole proponent of easing may get support from new deputy

* BOJ Gov Kuroda says price expectations "heightening somehwat" (Adds quotes, detail)

OKAYAMA, Japan, March 1 (Reuters) - Bank of Japan board member Goushi Kataoka on Thursday cautioned against a premature exit from the BOJ's ultra-loose monetary policy and called for a ramping up of the bank's massive stimulus program.

He also said policy coordination between the BOJ and the government was critical in eradicating public perceptions that deflation will persist, signaling the need for a mix of bigger monetary and fiscal stimulus measures to reflate growth.

"To influence inflation expectations, it is essential that policy coordination between the government and the BOJ ... is firmly ensured through action by both entities," he said in a speech to business leaders in Okayama, western Japan.

Since joining the board in July last year, Kataoka has been a sole dissenter to the BOJ's decision to keep monetary policy steady and has called for the BOJ to ramp up stimulus to achieve its inflation target.

Kataoka repeated his calls for the BOJ to ramp up monetary support by seeking to further push down borrowing costs of 10 years and longer, arguing that such a step would boost capital expenditure and help finance government spending.

With inflation distant from its 2 percent target, it was premature for the BOJ to consider following in the footsteps of its U.S. and European peers in dialing back stimulus, he said.

"I believe that, in Japan, there is still a long way to go before considering a change in monetary policy stance," said Kataoka, a former private economist.

"Improvements in inflation aren't enough. If the direction of monetary policy is changed without deep consideration to this situation, there's a risk Japan may return to deflation."

Kataoka's comments run counter to many others in the nine-member board, who have signaled the BOJ's next step should be to dial back stimulus given the rising cost of prolonged easing.

Bank of Japan Governor Haruhiko Kuroda told parliament on Thursday that inflation expectations were recently emerging from weakness and "heightening somewhat," signaling hope that a strengthening economic recovery will push up inflation.

But he conceded that wage and price growth remained disappointingly low, reflecting Japan's sticky deflationary mindset and underscoring market views the BOJ will maintain its stimulus program for the time being.

While Kataoka is unlikely to garner enough votes to affect BOJ decisions, his views underscore the dilemma the central bank faces in seeking to achieve its elusive price target with a dwindling policy tool-kit.

His views may carry more weight with the joining of a like-minded academic Masazumi Wakatabe, known as a vocal advocate of aggressive easing, as BOJ deputy governor in March.

After three years of heavy money printing failed to fire up inflation, the BOJ revamped its policy framework in 2016 to one targeting interest rates instead of the pace of asset buying.

Under the current policy, the BOJ guides short-term interest rates at minus 0.1 percent and the 10-year government bond yield around zero percent. (Reporting by Leika Kihara; Editing by Chris Gallagher and Kim Coghill)