New Bank of Japan board member Yoshihisa Morimoto said on Thursday that it is vital for the central bank to show its resolve to beat deflation, but he stopped short of elaborating on his views on monetary policy.

I think deflation is a major challenge facing the country's economy ... It is important for the BOJ to respond to deflation by showing a clear resolve to end it through comprehensive measures, Morimoto said at his first news conference as a board member.

He said the public's subdued growth expectations are to blame for the wide gap between supply and demand, the main cause of deflation, and that policymakers need to make persistent efforts to boost demand.

Morimoto, a former executive at Tokyo Electric Power Co (9501.T), Asia's biggest utility, started work on Thursday, filling the final vacancy on the nine-member board.

He offered few clues about his stance on monetary policy and toed the BOJ's official line that the bank needs to support companies and households through ample fund supplies.

Analysts say Morimoto's contribution to policy debate will likely be limited given his lack of experience in monetary policy, while some say his nomination may be intended to increase the influence of Japan's biggest business lobby, Nippon Keidanren.

The BOJ has kept interest rates at 0.1 percent since late 2008, and eased monetary policy last December and again in March by setting up and later expanding a facility offering cheap funds to banks.

The bank, after last month's board meeting, detailed its new loan scheme aimed at beating deflation over the longer term, saying it would provide up to 3 trillion yen ($34 billion) to industries with growth potential.

The BOJ will hold its next board meeting on July 14-15 and will likely keep interest rates near zero and review its long-term growth outlook issued in April, which is for the economy to recover on strong Asian growth.

Morimoto also warned that the yen's rise would affect corporate sentiment and profits, and said he would closely watch the impact of the currency's strength. ($1=88.38 Yen) (Editing by Chris Gallagher)

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