MNI POLICY: BOJ Kuroda: Policy Take Effect; Will Act If needed

     TOKYO (MNI) - Measures taken by the Bank of Japan and the government since

March to facilitate corporate financing and to maintain the stability of

financial markets are taking effect, Governor Haruhiko Kuroda told reporters

Wednesday, adding that the central bank would not hesitate to take further

action if needed.

     "The BOJ continues to implement the measures steadily and support corporate

financing," Kuroda told reporters.

     "(We) will not hesitate to take additional easy measures if needed," he

added.

     As for possible options, Kuroda said expanding the scale of program and

lowering short- and long-term policy rates were future policy options

     "But what kind of measures the BOJ may take depends on economic and

financial conditions at that time," Kuroda said.

     He pointed out that Japan's economy has hit bottom and will now move toward

the recovery phase, but noted the pace of economic recovery will be modest.

     As for economic recovery, "There are views, such as V-shaped or U-shaped

recovery. The pace of economic recovery will be modest but the economy will

recover steadily," Kuroda said.

     He also warned of the risk that if the pandemic is prolonged, liquidity

issue would turn to solvency. But he downplayed an imminent risk, saying that he

isn't worried about the risk now. However, he added that solvency was a

government issue.

     --INFLATION EXPECTATIONS

     Short-term inflation expectations fell in the wake of the drop in crude oil

price but medium- to long-term inflation expectations didn't fall, meaning that

Japan will not fall into deflation.

     Excessive drop of super long-term government bonds yields will have an

adverse impact on pension funds and life insurance firms in addition to

sentiment.

     "The BOJ must keep entire yield curve at low level," Kuroda said.

     Kuroda said that the BOJ will not change the 2% price target, although

Japan is far from hitting it.

     "The 2% price target hasn't been achieved in other nations. But I don't see

the need of changing (or lowering) the target at all," Kuroda said.

--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: MMJBJ$,M$A$$$,M$J$$$,MT$$$$]