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MNI (London)
     TOKYO (MNI) - Policy coordination with the government will be more
important if downside risks to economic activity and prices materialized, argued
a few Bank of Japan board members argued, the minutes of the January 22-23
policy meeting released Wednesday showed.
     However, the board largely saw no imminent need to consider taking
additional easy policy, as Japan's economy is expanding moderately underpinned
by the virtuous cycle from profits to spending.
     However, one member "expressed the recognition that hastily changing policy
amid a situation of high uncertainties would instead entail risks including
accumulation of financial imbalances and increasing swings in economic activity,
and therefore, it was important for the BOJ to take appropriate action in light
of the prevailing conditions by adequately collecting and analyzing
information," the minutes showed.
     At the meeting, The BOJ kept monetary policy unchanged, as Japan's economy
is expanding moderately despite emerging downside risks. The BOJ vowed to
maintain the current easy policy "for an extended period of time."
     The BOJ revised down its inflation projection for fiscal 2019 to 0.9% from
the 1.4% presented in October, following a run of weaker than expected price
data and downward pressure from the fall in crude oil on consumer prices, their
January quarterly Outlook Report showed. The BOJ board also lowered the median
inflation rate forecast in fiscal 2020 to 1.4% from 1.5% made in October.
     Other key points from the minutes:
     --"Most members shared the recognition that, although it was necessary to
carefully examine the fact that firms' cautious wage- and price-setting stance
and households' cautiousness toward price rises had been persistent, the
momentum toward achieving 2% inflation was being maintained."
     --One member said, "There was a high possibility that inflation
expectations in Japan were 'more sticky' than expected."
     --"A few members said that developments in the foreign exchange market and
demand could be viewed as factors exerting more of an impact on prices than
firms' moves to raise productivity in a phase of weak prices, according to the
analysis of factors affecting price movements over the past few years."
     --"A few members noted that, even if price declines were due to individual
factors, people's inflation expectations might fall through the adaptive
formation mechanism of inflation expectations and affect the underlying trend in
prices, depending on how wide the decline were spread across items."
     --One member said, "There seemed to be some room for the current conduct of
JGB purchase operations to be revised, taking account of the large stock of JGBs
already purchased by the BOJ."
--MNI Tokyo Bureau; tel: +81 90-2175-0040; email:
--MNI London Bureau; tel: +44 203-586-2225; email:
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