Although Hayami adhered to the doveish stance that the Bank of Japan would maintain loose monetary conditions to ensure economic recovery, the comments revealed his growing discomfort with the unprecedented and drastic policy of keeping short-term interest rates at zero percent.

"The zero interest rate policy is unquestionably abnormal and it is certain that the side-effects are gradually increasing," Hayami told a regular news conference. Despite the hawkish remarks, Hayami said he would reiterate the bank's stance of maintaining current policy to a gathering of finance ministers and other central bank governors from the Group of Seven (G7) nations on Saturday when they meet in Tokyo.

Noting that nearly a year had passed since the BOJ took the unprecedented decision last February to guide short term interest rates as close to zero as possible, Hayami said the side-effects, from the abnormal monetary stance were increasing. Hayami's expression of discomfort came as little surprise since he had indicated such concerns in an interview with local media this month, sparking speculation that the next step by the BOJ would be a departure from its zero rate policy. As for the beneficial effects of monetary policy over the past year, Hayami said it had helped to curb a rise in long term interest rates and to stabilise Japan's financial system.

"Japan over the past year has shown improvement, and the stock and foreign exchange markets have reflected this", he said.