MNI POLICY: BOJ Can Reduce Rates But Focused On Financing Now

--Kuroda Outlines Policy Options In FT Talk, But Lending Key For Now

     TOKYO (MNI) - The Bank of Japan can push rates further into negative

territory if need be, but the most important thing now is to provide necessary

financing to firms and households, Governor Haruhiko Kuroda said Thursday.

     "Of course, if necessary, we can make further monetary easing, by expanding

asset purchase program and expanding financing for companies, including smaller

firms, and also we can reduce interest rates," Kuroda told the FT's Digital

Dialogues: the Global Boardroom.

     "But I don't think necessary now. When we have to make further additional

monetary easing, there are many options and measures," he added.

     "We have to make fairly accommodative financial conditions in the coming

years. But extraordinal monetary policy, such as government bond purchases

without a limit, are temporary measures," he said.

     --NO DEFLATION

     On the economy, Kuroda said Japan will see a contraction in Q2 as well as

in Q1, as Japan deals with the shock of the coronavirus.

     However, once the virus spread is contained globally, Japan's economy could

start recovering in the second half of this year, he noted.

     "We have to carefully monitor how the coronavirus contains and whether the

second wave comes or not," Kuroda added.

     On inflation, he said "Of course, I don't think a 2% target to achieve

soon," Kuroda said.

     "According to the estimates by the policy board members, the inflation rate

in fiscal 2020 is negative but the inflation rate in 2021 and 2022 is positive."

"We don't expect Japan's economy will return to deflation."

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

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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