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(V1) Bullish Following Bear Channel Breakout

     TOKYO (MNI) - Bank of Japan Governor Haruhiko Kuroda said Thursday that the
period of the powerful easy policy may be extended beyond spring 2020 as
uncertainties regarding overseas economies remain elevated and it may take time
to hit the 2% price target.
     "We decided to clarify the forward guidance to show the strong stance of
achieving the 2% price target and of patiently maintaining the easy policy,"
Kuroda told reporters.
     He added that the BOJ's decision to strengthen forward guidance for policy
rates will strengthen trust in the central bank.
     The BOJ kept monetary policy unchanged Thursday, as Japan's economy is
still seen expanding moderately, despite persisting downside risks to both
activity and prices.
     But the Bank tweaked its forward guidance for policy rates, saying that it
intends to maintain the current extremely low levels of short- and long-term
interest rates for an extended period of time, at least through "around spring
     Other key points from Kuroda's presser:
     --Kuroda said that the BOJ vows to maintain the current easy policy "at
least" until spring 2020 but noted the period of easy policy may lengthen after
spring 2020.
     --"We clarified the forward guidance but this means that our policy is
'state contingent' or 'data dependent'," Kuroda said, adding that the BOJ will
act "swiftly" if needed to achieve the 2% price target.
     --Kuroda said that the achievement of the 2% price target will be difficult
in fiscal 2021, judging from the latest board's median inflation rate forecast
of +1.6%.
     --There was concern in financial markets that the effects of "for an
extended period of time" is weakening, with the planned sales tax hike
approaching (in October 2019).
     --Kuroda said that a virtuous cycle from income to spending in both
corporate and household sectors was still working, although he noted exports and
industrial production are weak on the back of the slowing global demand.
     --The global economy, as based on the forecast by the International
Monetary Fund, is expected to recover around mid-2019, but there is some
uncertainty as to whether the economy recovers as the IMF expects.
     --The BOJ board maintained the view that Japan's economy is likely to
continue on a moderate expanding "trend", despite being affected by the slowdown
in overseas economies, at least for the time being. But history has shown that
the meaning of adding the wording "trend" to the assessment reflects that the
BOJ's economic assessment has turned more cautious that the previous view.
     --The "heat map" of 14 financial activity indexes in the Financial System
Report showed that the volume of real estate lending to GDP is red, signaling
overheating, although Kuroda said he doesn't see it.
--MNI Tokyo Bureau; tel: +81 90-2175-0040; email:
--MNI London Bureau; tel: +44 203-586-2225; email:
[TOPICS: MMJBJ$,M$A$$$,M$J$$$]