MNI POLICY: BOJ Kuroda: Downside Risks Ease, Remains Vigilant

     TOKYO (MNI) - Bank of Japan Governor Haruhiko Kuroda Tuesday admitted

easing downside risks to overseas economies but he said the BOJ remains vigilant

against still high level downside risks.

     "Downside risks concerning overseas economies somewhat eased due to a

partial trade deal between the U.S. and China, and the progress of Brexit but

downside risks are still large and its level is still high," Kuroda told

reporters.

     He added, "If the downside risks materialized, it would have considerable

impact on prices and we have to keep a close eye to high downside risks to

overseas economies. (The BOJ) must pay attention to them."

     --REVISIONS

     Kuroda said that revised inflation forecasts aren't downward revision and

they are more or less unchanged, noting that the "underlying trend of inflation

rate hasn't changed and remains solid," he added.

     The BOJ board revised up its gross domestic product forecasts but revised

slightly (-0.1 percentage point) down its inflation forecasts from three months

ago.

     The BOJ had said that upward revision or downward revision of 0.1

percentage point are more or less unchanged. Kuroda also said that the

achievement of the 2% price target, which is a global standard, contributes to

stabilizing foreign exchange rates.

     --SIDE EFFECTS

     He admitted the side-effects of negative rate policy on households but said

the BOJ patiently maintains the easy policy led mainly by the negative interest

rate policy to achieve the 2% price target.

     Kuroda said that he doesn't mind that super long-term bond yields rise

slightly further.

     "The yield curve had steepened immediately after the BOJ had introduced the

yield curve policy but the curve has flattened recently. It's not trouble for

super long-term bond yields to rise slightly further," Kuroda said.

     Kuroda also indicated that it is premature to talk about unwinding of the

easy policy and said, "the BOJ will maintain easing bias for the time being."

--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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