MNI: BOJ Kuroda: Too Early To See 2% CPI, Debate Specific Exit

--Kuroda: Limited Impact of Volatile Financial Markets on Real Econ 

     TOKYO (MNI) - Bank of Japan Governor Haruhiko Kuroda on Friday repeated his

recent remarks that the central bank is "not at a stage to consider the

specifics of an exit" from large-scale monetary easing because "there is still

some distance" toward the bank's 2% inflation target.

     Kuroda also told a news conference after the bank's two-day policy meeting

that the impact of the recent volatile moves in the stock and currency markets

on the real economy is "limited" as the fundamentals in Japan and other major

economies are sound.

     It was his last regular briefing as the BOJ chief before his current term

ends on April 8. Pending parliamentary approval, Kuroda will serve his second

five-year term after the aggressive easing he launched in April 2013 has failed

to boost inflation to a stable 2%, hit by a plunge in crude oil prices and the

stubborn deflationary mindset held by Japanese firms and households. 

     --EASING SIDE EFFECTS

     The governor made balanced comments, noting very low long-term interest

rates are hurting returns on fixed-income investments for pension funds.

     Changes in short- to medium-term interest rates (usually yields on three-

to five-year zones) affect bank lending and corporate bond issuance while those

in super long-term interest rates (yields on 20- to 40-year bonds) do not have a

direct impact on lending, he said.

     Citing the bank's monetary policy statement, Kuroda reserved the option to

boost monetary easing if necessary to achieve the 2% inflation target.

     --COMMITTED TO 2%

     "But at this point, we are not considering conducting additional easing at

all," he said, noting a rise in inflation expectations should increase the

stimulative effects of monetary easing and help the bank achieve the target.

     He sought to reassure the BOJ will continue supporting growth and inflation

under its inflation-overshooting commitment, saying, "We won't reduce the degree

of easing as we get close to achieving the 2% price stability target."

     --NO TARGET CHANGE

     On Friday, the Bank of Japan board decided in an 8-to-1 vote to maintain

its monetary easing stance under the yield curve control framework it adopted in

September 2016. No change in monetary policy was widely expected as the BOJ

believes large monetary stimulus is still needed to guide low inflation around

1% toward its 2% target.

     The BOJ repeated it would make policy adjustments as appropriate, "taking

account of developments in economic activity and prices as well as financial

conditions, with a view to maintaining the momentum toward achieving the price

stability target."

     The BOJ is set to keep the shape of the nearly flat bond yield curve (-0.1%

overnight and around 0% in the 10-year zone) for some time to come because the

increase in consumer prices remains slow amid the sustained, moderate economic

recovery.

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

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