MNI 5 THINGS: BOJ Kataoka: Need More Easing To Hit 2% Target

     OKAYAMA, Japan (MNI) - Bank of Japan board member Goushi Kataoka made the

following points in his speech to business leaders in Okayama City, western

Japan, Thursday. After joining the bank's nine-member board in July, he has

dissented at every policy meeting, although he hasn't formally proposed any

specific policy action.

     -- Additional monetary easing is necessary to achieve the 2% inflation

target at an early stage as the bank's inflation-overshooting commitment

(continuing large-scale easing until the annual inflation rate exceeds 2% and

stabilizes around 2%) "hasn't been sufficient" to clearly increase inflation

expectations.

     -- Kataoka repeated his view that the BOJ should buy Japanese government

bonds so that the yields on JGBs with maturities of 10 years and longer will

broadly be lowered further,

     -- He also repeated his outlook that "the possibility of the year-on-year

rate of change in the CPI increasing to 2% through fiscal 2019 is low." At its

last policy meeting on Jan. 22-23, the BOJ board maintained its medium-term

growth and inflation projections, repeating what many see as an optimistic

outlook that the bank can hit the inflation target "around fiscal 2019 (to March

31, 2020)."

     -- On the eventual exit from aggressive easing, Kataoka said the BOJ is

still far from considering a change in the current easing stance because

inflation "remains distant from 2%." If the direction of monetary policy is

changed without deep consideration, there is a risk of the economy slipping back

into deflation, he argued.

     -- The government's plan to raise the sales tax further to 10% from the

current 8% in October 2019 could increase downward pressure on prices by

hampering a further widening of the positive output gap and a rise in inflation

expectations. The last sales tax hike, to 8% from 5% in April 2014, caused a

prolonged slump in consumer spending.

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com

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