The state of the nation's economy will likely remain severe in the first half of 2002 as a result of the Prime Minister's ongoing structural reforms, according to the chief of the central bank.

In a recent interview with Kyodo News, Bank of Japan Gov. Masaru Hayami warned against yielding to pain and putting off reforms necessary for growth led by private demand.

"If you yield to pains, the situation will go back to what it was," he said. "What the central bank needs to do now is continue the current relaxed monetary policy persistently to underpin the economy."