By John Geddie and Marc Jones

LONDON (Reuters) - Japanese inflation remains in line with the central bank's latest forecasts, a key policymaker said on Wednesday, adding that the country had escaped a protracted period of sliding consumer prices.

Speaking at an event in London, Bank of Japan board member Takako Masai said recent policy efforts to keep government borrowing costs on a tight leash had been "smooth" and had not accelerated declining liquidity in bond markets.

The BOJ said in January it expected inflation of 1.5 percent for the 2017 fiscal year which starts in April and that its 2 percent target would be hit by March 2019. The BOJ will unveil its latest forecasts next month.

"The negative impact of the oil price has been diminished, so it (inflation) is in line with our previous expectations," Masai told reporters on the sidelines of the event hosted by trade association ICMA.

In an earlier prepared speech, Masai said it was not "acceptable" that the BOJ had taken a long time to meet its objective of getting inflation back on a steady path but added that the worst was definitely over.

"The underlying trend in the CPI turned positive and has been in such territory for more than 2-1/2 years; this leads to the judgment that Japan's economy has reached a state of being no longer in deflation," said Masai.

"Needless to say, this does not mean that taking a long time to meet the objective is acceptable."

Masai said market-based measures of long-term inflation expectations, which remain muted, play an important role in getting inflation back to target.

"It is absolutely necessary to raise inflation expectations and promote a shift in expectation formation toward a more forward-looking direction.

"To change such expectations is not an easy task. This is even more the case with a country like Japan that has experienced protracted deflation."

After three years of massive asset buying failed to sufficiently lift Japanese inflation, the BOJ revamped its strategy in September from the pace of money printing to keeping key bond market interest rates down at ultra-low levels.

Masai said efforts to control the shape of the government bond yield curve, which include keeping 10-year yields pinned near zero, had been "smooth".

(Reporting by Marc Jones and John Geddie, editing by Pritha Sarkar)