MNI POLICY: BOJ Kuroda: Policy Beyond Spring '20; Keeps Target

     TOKYO (MNI) - Bank of Japan Governor Haruhiko Kuroda said Friday the BOJ

sees a fair possibility it will maintain the current easy policy beyond the

announced spring 2020, depending on future developments.

     Kuroda also said that the BOJ must see whether the global economy and

demand for IT-related goods pick up as expected in mid-2019, adding it will take

some time after its implementation to examine the effects of October's scheduled

consumption tax hike.

     The BOJ tweaked its stance of maintaining the current easy policy to saying

the BOJ will keep extremely low interest rates "at least through around spring

2020", having noted that downside risks to economic activity and prices are

large.

     Previously, the BOJ had just said "for an extended period of time."

     Other key points from Kuroda's speech:

     --"The BOJ considers that there is a fair possibility that the current low

interest rates will be maintained beyond this (spring 2020) period depending on

future developments.

     --"Policy board members shared the recognition that there are high

uncertainties regarding the outlook for economic activity and prices in Japan,

including developments in overseas economies, and that it is likely to still

take time to achieve the price stability target."

     --"There are two important points regarding the outlook for economic

activity. First is future developments in overseas economies. Although slowdowns

have been observed recently, the BOJ doesn't consider that overseas economies

will continue to deteriorate all the way."

     --"The second important point in forecasting future developments is the

sustainability of domestic demand. In order for Japan's economy to continue

expanding moderately without interruption, it is necessary to maintain firm

domestic demand until overseas economies pick up."

     --However, Kuroda warned, "Attention should be paid to the possibility that

firms' investment stance will become cautious in mainly the manufacturing

sector, if a pick-up in overseas economies takes longer than expected going

forward."

     --"The mindset and behavior based on the assumption that wages and prices

will not increase easily have been deeply entrenched."

     --"Given economic developments in Japan, where prices and inflation

expectations have not risen easily, the BOJ considers it necessary to maintain a

positive output gap for as long as possible by keeping interest rates at

sufficiently low levels for a prolonged time, in order to achieve the price

stability target."

     --The BOJ has no plan to abandon the 2% inflation target, which is the

global standard. "Aim (on) hitting the 2% target will contribute to stabilizing

foreign exchange rates," he said.

     --The government must build confidence through medium- to long-term fiscal

health, Kuroda said without elaborating.

--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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