MNI 5 THINGS: BOJ New Deputy Governors Ensure Continued Easing

--Amamiya: Won't Rule Out Policy Tweaking Before 2% CPI

--Wakatabe: Should Ease More Without Hesitation If Needed  

     TOKYO (MNI) - The Bank of Japan's new deputy governors on Tuesday sought to

reassure the public and investors that the central bank will maintain monetary

easing until it anchors inflation around its 2% target, brushing aside any

speculation that the bank is preparing to unwind large monetary stimulus.

     However, Masayoshi Amamiya, 62, a career central banker responsible for

drafting many of the bank's policy changes, also told reporters that the BOJ

board may tweak large-scale easing launched nearly five years ago, before

achieving the 2% inflation target, meaning it could raise interest rate targets

before starting to tighten the policy stance.

     On the other hand, Masazumi Wakatabe, 53, a reflationist former economics

professor who has advocated bold monetary easing to overcome deflation, argued

that the BOJ should conduct additional easing "without hesitation" if necessary

to achieve the 2% target.

     The following are the key points from a news conference by the two

policymakers who began their five-year terms on Tuesday.

     --POLICY ADJUSTMENT

     Amamiya: The BOJ "theoretically won't rule out" raising interest rates

before it achieves the 2% price target but it is not at a stage to discuss the

need for fine-tuning the easy policy.

     Wakatabe: The BOJ must avoid a premature exit from easing; The BOJ should

not publicly debate exit strategies before 2% inflation is anchored.

     --2% CPI TARGET

     Amamiya: The BOJ is not setting a deadline for achieving 2% inflation but

trying to hit the target "at the earliest possible time." (The BOJ has failed to

meet the initial timeframe of achieving it in about two years from April 2013,

when it began aggressive easing); achieving the 2% price target should help

stabilize currency and other financial markets.

     Wakatabe: Lowering the price target from 2% to 1% would be undesirable.

     --CONTINUED EASING

     Amamiya: The BOJ needs to maintain monetary easing "persistently" in order

to improve the output gap further in positive territory, which should help raise

wages through the tightness of labor market conditions; the benefits of easing

are larger than its costs.

     Wakatabe: The BOJ should conduct additional easing "without hesitation" if

necessary to achieve its target and must avoid a premature exit from easing; no

comment on what additional easing tools should be used.

     --SIDE EFFECTS

     Amamiya and Wakatabe: The sustainability of the yield curve control policy

framework adopted in September 2016 is high.

     Amamiya: The BOJ needs to pay attention to the side-effects prolonged

easing that are already emerging.

     Wakatabe: No side-effects of easy policy have emerged.

--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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