MNI POLICY: BOJ Opinions - Momentum Worry Eases; Ready To Act

     TOKYO (MNI) - The Bank of Japan judged there had been no loss of momentum

toward achieving its price stability target, justifying the board's decision to

keep monetary policy unchanged at the October 30-31 policy meeting, the summary

of opinions released Monday showed.

     However, board members saw the need to remain cautious and maintain a

readiness to act quickly if needed, the summary showed.

     The BOJ board didn't take pre-emptive policy as it continues to see its

economic recovery scenario based on solid domestic demand in place, although it

did acknowledge sizeable downside risks remained.

     The central bank did, however, amend forward guidance for policy rates,

indicating it would tolerate them moving below current levels.

     "As for the policy rates, the BOJ expects short- and long-term interest

rates to remain at their present or lower levels as long as it is necessary to

pay close attention to the possibility that the momentum toward achieving the

price stability target will be lost," the BOJ said.

     The previous forward guidance was that the BOJ will maintain the current

easy policy "at least around spring 2020."

     Other key points from the summary of opinions:

     --One member said, "although the inflation momentum is judged as being

maintained at present, it cannot be said that households' and firms' inflation

expectations have been robust, and thus closer attention should continue to

paid."

     --The same member said, "It is necessary for the BOJ not to hesitate to

take additional easing measures if there is a greater possibility that the

inflation momentum will be lost."

     --Another member said, "In the current situation where risks are skewed to

the downside, the BOJ should continue to examine whether additional monetary

easing will be necessary."

     --The same person said, "the BOJ should seriously prepare for the next

economic downturn as one of the risk scenarios. In doing so, it will become more

important to not only conduct monetary policy but also enhance cooperation with

the government in terms of fiscal and other policies."

     --A different member said, "As the inflation momentum has not been lost,

the BOJ should maintain the current monetary easing policy. That said, it is

important to continue closely examining developments in the global economy, and

the BOJ could show its policy stance by, for example, revising the forward

guidance."

     --Another member said, "There has been no further increase in the

possibility that the momentum toward achieving the price stability target will

be lost."

     --"There is some possibility that the momentum toward achieving the price

stability target will be lost," one member said.

     --One member said, "regarding investment in yen-denominated bonds, if

interest rates are lowered by 0.1 percentage point, pension funds and investment

trust could lose profits of tens of billions of yen."

--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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