MNI POLICY: BOJ Kuroda Upbeat On Hopes For Overseas Recovery

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

exports and industrial production have been hit by slowing overseas demand, but

he doesn't see Japan falling into recession as it is unlikely overseas economies

deteriorate further.

     Kuroda told reporters that the expected stabilization and recovery of

global demand was a main factor behind the BOJ's decision to keep their baseline

recovery scenario in place. 

     The governor also said that the BOJ aim remains the achieving of the 2%

price target, although there some legislators questioning whether the central

bank should stick to the target target or adopt a more flexible approach.

     Earlier Friday, the BOJ kept monetary policy unchanged, maintaining the

view that Japan's economy is expanding moderately despite emerging downside

risks. The BOJ vowed to keep the current easy policy "for an extended period of

time."

     The BOJ board maintained the overall economic assessment, saying "Japan's

economy is expanding moderately, with a virtuous cycle from income to spending

operating," adding that the economy "is likely to continue its moderate

expansion."

     However, in the wake of weaker data, the BOJ lowered its assessment of

exports and industrial production, and overseas economies, reflecting the

slowing in China and Europe. The downward revision of exports was the first

since March 2016 and the downward revision of industrial production was the

first since September 2015.

     --KEY PRESSER POINTS

     --"The slowing overseas economies are affecting (Japan's) exports and

industrial production," Kuroda said. However, he added that domestic demand,

such as capital investment and private consumption, remains solid, supporting

the virtuous cycle from profits to spending. "Capital investment remains solid

and private consumption is rising moderately."

     --"The U.S. economy remains firm but China and European economies are

slowing. If the slowdown of those areas worsened or expanded, (Japan's) exports

and production will fall further, which in turn will weaken (Japan's) domestic

demand," Kuroda said. "We need to pay attention to the risk. But the possibility

is small that the overseas economies continue worsening," he added.

     --"Many board members agree that it is appropriate to patiently maintain

the current easy policy," although the BOJ downgraded its assessment of exports

and production.

     --Kuroda laid out an optimistic view on the China's economy, noting Beijing

had already decided and enacted a raft of stimulus measures.

     --"The 2% price target is determined by the board members. We need to

achieve the 2% price target as the board mission. It takes some time to achieve

the price target."

     --Kuroda indicated that the BOJ will not change its price target nor

abandon achieving it. Finance Minister Taro Aso has reportedly said that only

the BOJ and the press still target 2%, indicating he also sees the need for a

more flexible BOJ stance.

--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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