By Leika Kihara and Stanley White

TOKYO (Reuters) - Bank of Japan Deputy Governor Hiroshi Nakaso said the central bank would not rule out deepening negative interest rates or any other easing steps needed to achieve its price target.

Nakaso said the BOJ's comprehensive assessment of its policy effects to take place later this month will look at ways to accelerate achievement of its 2 percent inflation target. It will not discuss ways to withdraw its ultra-loose monetary policy.

While inflation is expected to resume a gradual uptrend, uncertainty persists on whether such price rises will heighten inflation expectations, Nakaso said.

"Based on a candid assessment, we will decide whether or not it will be necessary to make adjustments to the current policy framework, and if judged necessary, in what way it should be adjusted," Nakaso said in a speech on Thursday.

Under its current framework combining negative rates with hefty buying of government bonds and some riskier assets, the BOJ has gobbled up a third of Japan's bond market and attracted criticism from banks for squeezing already thin profit margins.

Sources have told Reuters the BOJ will consider modifying its policy framework and debate some of the unintended consequences of its ultra-loose policy at the rate review Sept 20-21.

Nakaso acknowledged the BOJ's decision in January to adopt negative rates may impair financial intermediation by hurting financial institutions' profits, if maintained for a long time.

The BOJ will pursue its massive asset-buying program and negative rates by "striking the right balance" between the program's powerful policy effects and possible impairment of financial intermediation, Nakaso said.

But that does not mean the central bank will rule out any further cuts in the negative interest rate, he added.

"Depending on economic, price situations and financial conditions, further measures may still deemed necessary" after weighing the benefits and costs of current policies, he said.

The BOJ eased monetary policy in July and pledged to conduct a comprehensive assessment of its policies at this month's rate review. A majority of analysts polled by Reuters expect the bank to expand stimulus again at the meeting.

(Reporting by Leika Kihara and Stanley White; Editing by Chris Gallagher and Eric Meijer)