BANK of Japan Governor Masaaki Shirakawa said yesterday that the outlook for the economy and prices is "extremely uncertain" because rising oil and raw materials could fan inflation as well as squeeze companies and consumers.

Growth and prices are moving in opposite directions, making the central bank's policy decisions difficult, Shirakawa told a parliamentary committee in Tokyo yesterday.

Central banks can take any policy actions, including interest-rate increases or cuts, to achieve sustainable growth and stable prices, he said.

The central bank has kept the overnight lending rate at 0.5 percent, the lowest among major economies, since doubling it in February 2007, Bloomberg News said.

Shirakawa also said the fact that two positions on the Bank of Japan's policy board remained vacant is "unusual" and "undesirable."

The Yomiuri and Nikkei newspapers reported yesterday that the government was expected to propose Kazuhito Ikeo, a Keio University professor, to join the policy board.

Finance Minister Fukushiro Nukaga said the proposal "will probably be made in that direction," while Economic and Fiscal Policy Minister Hiroko Ota said Ikeo "would be an appropriate appointment."

The vacancies have existed since the opposition rejected government candidates in March and April.