* About 70% saw demerits in BOJ's prolonged easing - survey
* Weak yen among drawbacks of monetary easing cited by firms
* Many firms keen to hike wages, found it easier to raise prices
* Findings may help BOJ justify steady interest rate hikes
TOKYO, May 20 (Reuters) - Japan's large manufacturers saw exchange rate stability as the biggest factor they wanted out of the central bank's monetary policy, a Bank of Japan survey showed on Monday.
Roughly 70% of firms polled said they experienced drawbacks from the BOJ's 25-year-long monetary easing measures including a weak yen that pushed up import costs, the survey showed.
About 90% of the total also saw benefits from the BOJ's prolonged easing such as low borrowing costs, the poll showed.
The survey, conducted on roughly 2,500 firms nationwide, highlights the importance Japanese firms place on yen moves in assessing the impact of monetary policy.
Many firms surveyed also said they were no longer able to hire enough workers if they kept wage growth low, and saw an economy where wages and inflation rose in tandem as more favourable than one where wages and prices barely moved.
"Japan is on the cusp of seeing big changes in corporate behaviour," the BOJ said in the survey conducted as part of a long-term review of the pros and cons of its past monetary easing steps.
About 90% of firms said they were more willing to hike wages largely to address labour shortages, while over 80% said they found it easier than before to hike prices, the survey showed.
The findings underscore the BOJ's view that rising wages and prices will keep inflation sustainably around its 2% target, and allow it to raise interest rates from current near-zero levels.
The BOJ ended eight years of negative interest rates and other remnants of its radical monetary stimulus in March, making a historical shift away from decades of ultra-loose policy.
But the decision failed to reverse the yen's declines that have hurt consumption by pushing up imported goods prices, as markets focused on the still-large interest rate divergence between Japan and the United States.
The long-term review was launched by BOJ Governor Kazuo Ueda in April last year, and looks into the benefits and drawbacks of the unconventional easing tools the central bank used during its 25-year battle with deflation.
While the BOJ has said the review won't have a direct impact on future monetary policy, analysts say the discussions could offer clues on how soon the central bank would raise rates again and reduce its huge bond purchases.
Monday's survey, which was part of the review, polled companies on how they saw their business activities affected by the central bank's monetary easing measures since the mid-1990s.
The BOJ will also hold on Tuesday a second workshop where its officials and academics discuss the impact of past monetary easing steps on the economy and prices. (Reporting by Leika Kihara; Editing by Jamie Freed, Sam Holmes and Shri Navaratnam)
