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MNI (London)
     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
     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
     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.
     --"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:
--MNI London Bureau; tel: +44 203-586-2225; email:
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