* Pressure rising on BOJ for more stimulus
* BOJ adds new phrase but did not pre-commit to Oct
* BOJ wants to avoid being cornered into action next month
* Focus on Gov Kuroda's speech in Osaka Sept 24
By Leika Kihara
TOKYO, Sept 20 (Reuters) - By adding vague new language toits latest policy statement, the Bank of Japan is hoping to keepunwanted sharp gains in the yen in check, without having to tapits depleted policy tool-kit or tying its hands on futuremonetary action.
In a statement announcing its decision to keep policy steadyon Thursday, the BOJ prompted some head scratching by saying itwould "re-examine" economic developments at next month's ratereview.
In particular, it said "closer attention" was needed to thepossibility that the economy could lose momentum to hit its 2%inflation target.
Some market watchers thought it could be a pre-commitment toramp up stimulus at the BOJ's rate meeting on Oct. 30-31, butofficials familiar with the central bank's thinking say it maybe more a case of a central bank with limited options trying tobuy time.
The wording of the phrase is vague enough to allow the BOJto hold off on easing next month, if markets remain stable andglobal risks do not dampen still-resilient Japanese domesticdemand, they say.
"The BOJ signaled that risks are rising and that it's readyto act if needed. But it doesn't have any pre-set idea on whento ease," one of the officials said on condition of anonymity.
BOJ policymakers instead had their eyes set on the EuropeanCentral Bank and the U.S. Federal Reserve, which both topped upmonetary support this month, the officials said.
Failure to act when other central banks were easing riskstriggering significant yen rises, putting further pressure onexports and cooling business sentiment.
Yen moves have always been key drivers of action for theBOJ. A former top currency diplomat, BOJ Governor HaruhikoKuroda is skilful at jawboning markets and discouragingexcessive bets on yen appreciation, people who know him say.
"The primary objective of the new phrase was to keep yengains in check," said former BOJ board member Takahide Kiuchi,who is now an economist at Nomura Research Institute. "BOJofficials are probably relieved the yen didn't rise too much."
The yen rallied on Thursday after the BOJ's decision to keeprates on hold but hovered around 108 to the dollar, well belowthe 100 level seen by markets as the bank's line-in-the-sand.
But while the BOJ may have succeeded in keeping yen bulls atbay for now, it also has to prevent markets from pricing in anOctober easing too heavily and cornering it into action.
The BOJ wants to use its remaining ammunition wisely asyears of heavy money printing has left it with few tools tofight the next recession. Many BOJ officials are also wary ofthe rising cost of prolonged easing, such as the strainultra-low rates is inflicting on financial institutions'profits.
Pushing short-term rates deeper into negative territory,which is a key option if the BOJ were to ease, remains unpopularparticularly among Japan's banking industry.
"The BOJ doesn't want markets to interpret the new phrase assignaling an October easing is a done deal," said Kazuo Momma, aformer BOJ official who is now an economist at Mizuho ResearchInstitute.
"It will try to manage market expectations via speeches andother means of communication leading up to the October meeting."
Kuroda will speak to business leaders in Osaka, westernJapan, on Tuesday. Board members Takako Masai and Yukitoshi Funowill also speak on Sept. 25 and Oct. 3, respectively.(Reporting by Leika Kihara; Editing by Kim Coghill)