MNI POLICY: BOJ Kuroda: To Act As Needed; Eyes Fed, ECB Impact

     TOKYO (MNI) - Bank of Japan Governor Haruhiko Kuroda said on Thursday that

the BOJ will enact additional easy policy "without hesitation" if needed,

although seeing no need to take action now.

     The BOJ's policy will not be influenced by policy decisions by the U.S.

Federal Reserve or the European Central Bank, but it needs to watch the impact

of their decisions on financial markets and the global economy, Kuroda told

reporters Thursday.

     He said the Bank will maintain its current easy policy that will achieve

the 2% price target, and even aiming at the 2% price target -- the global

standard -- will help stabilize the yen, although he stressed policy doesn't

target the exchange rate.

     Earlier in the day, the BOJ board left current policy unchanged, restating

forward guidance that easy policy will be maintained "at least through around

spring 2020", as it saw Japan's economy continuing to expand moderately, despite

growing downside risks.

     Despite intensified trade tensions and a deteriorating outlook for the

global economy, the BOJ maintained its overall assessment of the economy, as

recent data hadn't altered the baseline outlook, seeing the "virtuous cycle from

income to spending operating".

     Other key points from Kuroda's presser

     --Kuroda cited four potential policy options, such as lowering the

short-term interest rate from -0.10% and the long-term interest rate from around

zero percent, accelerating the pace of injecting monetary base and expanding the

asset purchases.

     --"Japan's economy will be influenced by the slowdown in overseas economies

for the time being but the economy is likely to continue on a moderate expanding

trend," Kuroda said, adding that Japan's economy will not fall into recession

due to the consumption tax hike as the board see a moderate economic recovery

including the impact of the tax hike.

     --If the government took fiscal policy to prevent the economy from

worsening, the BOJ would cooperate but didn't elaborate.

     --Kuroda maintained his optimistic outlook on the global economy, saying

that the main scenario doesn't change that the global economy will gain momentum

from mid-2019 and into 2020, although downside risks are large.

     --Kuroda indicated that the BOJ doesn't need to prevent Japanese government

bond yields from falling, saying that it is appropriate for the BOJ to cope with

the drop in a flexible manner.

     The 10-year bond yield fell to -0.160% in early morning trade on Thursday

for the lowest level since August 2016. The BOJ has expanded its allowance of

range of the 10-year long-term interest rate to around a range of -0.20% to

+0.20% from a range of -0.10% to +0.10%.

     --The BOJ is watching the impact of the flattening yield curve on financial

institutions and financial system, and will take appropriate action if needed

but didn't elaborate on how and what kinds of action the BOJ would take.

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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