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     TOKYO (MNI) - Bank of Japan board member Yukitoshi Funo said Wednesday that
the central bank's effort to achieve its 2% inflation target, which it sees as a
global standard, should help stabilize foreign exchange rates.
     Funo also repeated that the BOJ must continue its monetary easing program. 
     "Judging from the current economic, financial and price conditions, it is
vital for the BOJ to push ahead with aggressive easing under the current policy
framework," Funo said in a speech to business leaders in Miyazaki City,
southwestern Japan.  
     The BOJ aims to achieve 2% inflation, not a lower target such as 1%,
because consumer price statistics have an upward bias compared to actual prices,
Funo said. 
     In addition, a lower inflation target could adversely affect the currency
market, Funo warned. BOJ officials have said if the BOJ targets a 1% inflation
rate while other major central banks are trying to anchor inflation around 2%,
it could cause the yen to appreciate, hurting exporter profits and thus domestic
     "Major central banks are conducting monetary policy to achieve inflation
around 2%. Therefore, if the BOJ aims to achieve 2% inflation, it will
contribute to stabilizing foreign exchange rates in the longer term, and then
corporate activities," said Funo, a former Toyota Motor executive.
     When the time is right, the bank needs to guide nominal interest rates
higher in line with price rises so that it can cut interest rates in the future
when it needs to stimulate the economy, he said.
     At its latest policy meeting on Oct. 30-31, the BOJ board decided in an
8-to-1 vote to maintain its current monetary easing stance under the yield curve
control framework it adopted in September last year.
     In addition, recent weak price data prompted the board to lower its
projections for consumer prices in fiscal 2017 and 2018, but the BOJ stuck to
its latest timeframe that it can achieve its 2% inflation target "around fiscal
2019" ending in March 2020.
     Under the yield curve control framework, the BOJ is seeking to stabilize
the 10-year government bond yield, the benchmark for long-term borrowing costs,
at around zero percent and keep the overnight interest rate at -0.1%.
--MNI Tokyo Bureau; tel: +81 90-2175-0040; email:
--MNI Tokyo Bureau; tel: +81 90-4670-5309; email:
--MNI BEIJING Bureau; +1 202-371-2121; email:
[TOPICS: MMJBJ$,M$A$$$,M$J$$$,MT$$$$]

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