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MNI POLICY: BOJ Keeps Policy Unch; To Buy JGBs At Y80 Trln

MNI (London)
     TOKYO (MNI) - The Bank of Japan board decided Wednesday in a 7-to-2 vote to
stand pat on monetary policy, leaving yield curve control the asset purchases
unchanged, as Japan's economy is expanding moderately, despite the downside
risks.
     The BOJ vowed to maintain its current easy policy "for an extended period
of time," taking into account uncertainties regarding economic activity and
prices, including the effects of the consumption tax hike planned for October
2019.
     The key points from the BOJ board decision, which came after the latest
two-day policy meeting that ended Wednesday:
     --Under the yield curve control framework adopted in September 2016, the
BOJ will keep the target for the overnight interest rate at -0.1%.
     -- The BOJ will continue buying JGBs to stabilize the 10-year yield "around
zero percent" but it will also allow the long-term interest rate to "move upward
and downward to some extend" in line with the changes in economic growth and
inflation.
     -- Officially, the BOJ will maintain the annual pace of its JGB purchases
at around Y80 trillion, although the pace has declined sharply as the
accumulated effects of keeping rates down with asset purchases have intensified.
The bank noted it will conduct the purchases "in a flexible manner."
     -- The BOJ maintained "forward guidance" for policy rates, showing that the
BOJ vows to keep the current easy policy for an extended period of time.
     -- On forward guidance, board member Yutaka Harada, a former government
economist, dissented, arguing that it would be better to adopt guidance that
would "further clarify its relationship" with the inflation target. Goushi
Kataoka, a former private-sector economist, also opposed. He repeated his
opinion that it would be better to promise additional easing in the event of a
downward revision to the board's longer-term inflation outlook.
--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
[TOPICS: MAJDS$,MMJBJ$,M$A$$$,M$J$$$]
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com

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