MNI POLICY: BOJ On Hold; To Revew Econ, Price Condition in Oct

     TOKYO (MNI) - The Bank of Japan left monetary policy unchanged Thursday,

but vowed to re-examine economic and price developments at the next policy

meeting in October.

     "Slowdown in overseas economies have continued to be observed and their

downside risks seem to be increasing, the BOJ judges that it is becoming

necessary to pay closer attention to the possibility that the momentum toward

achieving the price stability target will be lost," a policy statement said,

following the Board's 7-to-2 vote.

     "The BOJ will reexamine economic and price developments at the next MPM,

when it updates the outlook for economic activity and prices," it added.

     This increased the possibility that the BOJ will consider conducting

further easing at the next policy-setting meeting when the board updates its

medium-term outlook for economic growth and inflation.

     --GUIDANCE

     The board also maintained its forward guidance for policy rates, saying

that the BOJ will maintain the easy policy "at least through around spring

2020."

     Despite intensified trade tensions and heightened uncertainties over the

global economy, the BOJ maintained its overall economic assessment as the

already-released economic data didn't prompt it to abandon the baseline economic

view.

     At the September meeting, the BOJ maintained the view, saying, "Japan's

economy has been on a moderate expanding trend, with a virtuous cycle from

income to spending operating, although exports and production have been affected

by the slowdown in overseas economies."

     As for the near-term outlook, the BOJ maintained the view that "Japan's

economy is likely to continue on an expanding trend, despite being affected by

the slowdown in overseas economies."

     A recovery of the global economy, initially expected after mid-2019, has

been delayed due to the continued trade disputes.

     The assessment of major economic components was also left unchanged from

the previous view made in July.

     The key points from the BOJ board decision:

     --Under the yield curve control framework adopted in September 2016, the

BOJ will keep the target for the overnight interest rate at -0.1%.

     -- The BOJ will continue buying JGBs to stabilize the 10-year yield "around

zero percent" but it will also allow the long-term interest rate to "move upward

and downward to some extend" in line with the changes in economic growth and

inflation.

     --As for the risk factors, the BOJ said, "The U.S. macroeconomic policies

and their impact on global financial markets, the consequence of protectionist

moves and their effects; developments in emerging and commodity-exporting

economies such as China, including the effects of the two aforementioned

factors; developments in global adjustment in IT-related goods; negotiations on

Britain's exit from the European Union and geopolitical risks and their effects

and geopolitical risks."

     --KATAOKA, HARADA DISSENT

     Reflationist board members Yutaka Harada, a former government economist,

and Goushi Kataoka, a former private-sector economist, dissented again.

     Harada called the guideline for market operations "too ambiguous" while

Kataoka continued to call for additional easing, saying "it was desirable to

strengthen monetary easing" amid heightened uncertainties regarding development

in economic activity and prices going forward.

     As for rate policy, the BOJ said it "will not hesitate to take additional

easing measures if there is a greater possibility that the momentum toward

achieving the price stability target will be lost."

--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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