MNI POLICY: BOJ Minutes: China Steps Impact Worry; Weak Prices

     TOKYO (MNI) - China's stimulus measure are expected to boost their economy,

most Bank of Japan board members expect, although some expressed uncertainty

over their impact, the minutes of the March 14-15 policy-setting meeting

released Wednesday showed.

     Most members expressed concern over firms' cautious wage- price setting

stance and households' caution toward price rises, which will impede a smooth

pick-up in both consumer prices and inflation expectations.

     At the meeting, the BOJ left monetary policy unchanged, voting 7-2 to

continue with yield curve control and the asset purchases, as Japan's economy is

expanding moderately, despite heightened downside risks.

     The minutes showed policymakers didn't discuss additional easy policy at

the March meeting.

     The BOJ maintained their 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 on

exports and industrial production as well as overseas economies, reflecting a

slowing in China and Europe.

     Other key points from the minutes:

     --"Many members said that the pace of growth in the (Chinese) economy was

highly likely to recover through the second half of 2019, as the effects of

stimulus measures that authorities already had been proceeding with would

gradually materialize and a pick-up in IT-related demand was anticipated."

     --Some members "pointed out that, in a situation where the corporate sector

had been facing a high level of debt outstanding, implementing stimulus measures

was a challenging policy conduct for authorities, and the there were

considerable uncertainties as to when and to what extend the measures' effect

would emerge."

     --"A few members expressed the recognition that the BOJ should be more

vigilant than before about whether the decreases in exports and production would

spread to employment and domestic demand, thereby weakening the inflation

momentum."

     --One member said, "It was important that the macroeconomic policy

framework -- a policy mix of monetary and fiscal policies -- continue to be

sustained," but didn't elaborate.

     --Many members shared the view "amid heightening uncertainties associated

with the outlook for the global economy, market participants had become more

sensitive to messages conveyed by central banks, and thus the BOJ also needed to

give due consideration to its strategy for communication to the public."

--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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