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TOKYO (MNI) - Bank of Japan board member Takako Masai says the BOJ must
watch the impact of the coronavirus on the global economy and the sentiment of
firms and households in Japan.
"If there is a greater possibility that the momentum (toward achieving the
price stability target) will be lost, the BOJ should not hesitate to take
additional easing measures," Masai told business leaders in Nara City on
She added, "The BOJ will persistently devise measures considered necessary
at the time and continue to conduct monetary policy in an appropriate manner
while carefully paying attention to both the positive effects and side effects
of it policy."
Masai did not elaborate, however, on when and how the BOJ would consider
more easing measures.
Masai is widely regarded as a neutral board member.
At the last meeting on Jan. 20-21, the BOJ left monetary policy unchanged,
with little signs Japan's economy had deviated from the baseline recovery view,
although broad downside risks to economic activity and prices remain. The BOJ
has upgraded its median forecasts for real economic growth rates in this fiscal
year, fiscal 2020 and fiscal 2021, boosted by the government's latest economic
stimulus measures, although the medium-term inflation forecasts were left
broadly unchanged from three months ago.
Other key points from Masai's speech:
RISKS TO THE OUTLOOK
--"Downside risks to Japan's economic activity and prices stemming from
overseas economies seem to be still significant, although they have decreased
--"Development in overseas economies remains a risk factor. I think that it
is necessary to pay close attention to the effects on the world economy -
including the Chinese economy - caused by the spread of the novel coronavirus,
and the impact of these downside risks on firms' and household's sentiment in
--As for domestic demand, "the question is whether the moderate increasing
trend in private consumption will be maintained."
--"I would like to closely monitor whether there will be a change in the
trend in private consumption in the long run, as the effects of the decline in
real income (caused by the tax hike) may appear gradually over time."
--"Prices have continued to show relatively weak developments compared to
the economic expansion and tight labor market conditions."
--"Inflation expectations that are strongly affected by the adaptive
formation mechanism do not rise easily."
RISKS TO PRICES
--A further rise in real wages is necessary for the BOJ to maintain the
baseline scenario that prices will rise toward the 2% price target, Masai said.
--She added: "I still consider these (foreign exchange rates and
international commodity prices) to be risks since they not only directly affect
prices but also may adversely affect business and household sentiment."
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