MNI POLICY: BOJ Opinions: One Member Calls For Policy Review

--BOJ Publishes Summary Opinions from Jan 20/21 Meeting

     TOKYO (MNI) - A review of the Bank of Japan's monetary policy was becoming

a necessity as muted growth and stubbornly low inflation continued, one board

member emphasized at the Jan. 20/21 meeting, the summary of opinions released

Wednesday showed.

     Another member cited a possibility that continuing the negative interest

rate policy would lower households' and firms' inflation expectations.

     The overall dovish bent of the Board was summed up by a different member,

who said that "since the possibility that the inflation momentum will be lost

continues to warrant attention, it is appropriate to maintain a policy stance of

being titled toward monetary accommodation."

     The BOJ left policy unchanged  at the meeting, with little sign Japan's

economy has deviated from its baseline recovery scenario, although broad

downside risks to economic activity and prices remain.

     It also upgraded its median forecasts for real economic growth rates in

this fiscal year, fiscal 2020 and fiscal 2021, all boosted by the government's

latest economic stimulus measures.

     The Bank's medium-term inflation forecasts were left broadly unchanged from

the three months ago, with no noticeable pick-up inflation expectations.

     Other key points from the summary of opinions:

     MONETARY POLICY

     -- "Since downside risks to economic activity and prices are still

significant, it is necessary to be prepared for a possible economic downturn as

one of the risk scenarios. It will become more important to enhance cooperation

with the government in terms of fiscal and growth policies."

     -- "Given that quite a long time has passed since the BOJ introduced a

powerful monetary easing policy, it is becoming more important to continuously

make efforts to enhance the sustainability of the policy while weighing up the

cumulative effects and side effects."

     --"It is necessary to closely monitor the business conditions of regional

financial institutions as well as their efforts made regarding corporate

management."

     --"Economic indicators in Japan since last October have not been

favourable."

     ECONOMIC DEVELOPMENTS

     --Developments in consumption-related indicators since the consumption tax

hike show that recovery has been weak. Although there has been improvement in

households' sentiment indicators, "its pace has been slow compared to that of

the tax hike conducted in fiscal 2014."

     --"It is appropriate to assess the impact of the output gap on prices in

terms of the 'area' calculated by multiplying the degree of the positive gap by

its duration."

     --"Although a virtuous cycle from income to spending has supported price

rises, in order to maintain this cycle, it is necessary to continue raising

wages as well as improve corporate profits to encourage such continuous wage

increases."

--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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