MNI POLICY: BOJ Opinions: Uncertainties Underpin Cautious View

     TOKYO (MNI) - Heightened uncertainties over the outlook for the economy and

prices prompted the Bank of Japan to clarify the continuation of its easy policy

and the forward guidance for rates at the April 24-25 policy-setting meeting,

the summary of opinions at the meeting released Friday showed.

     One member also emphasized the need for the BOJ to strengthen the easy

policy at the meeting but the view wasn't shared by others.

     The preliminary minutes also indicated that the discussion on the

side-effects of a prolonged easy policy hasn't developed from previous meetings.

     At the meeting, the BOJ kept monetary policy unchanged, with Japan's

economy still expanding moderately despite persisting downside risks to both

activity and prices.

     But the BOJ clarified its forward guidance for policy rates, saying the BOJ

intends to maintain the current extremely low levels of short- and long-term

interest rates for an extended period of time, "at least through around spring

2020," taking into account uncertainties regarding economic activity and prices

including developments in overseas economies and the effects of the scheduled

consumption tax hike.

     On forward guidance, board member Yutaka Harada, a former government

economist, dissented, arguing that it was appropriate to further clarify its

relationship with the price stability target. 

     Goushi Kataoka, a former private-sector economist, was also opposed. He

said that it was necessary for the BOJ to make a commitment to take additional

easing measures if it revised its medium- to long-term inflation expectations

downwards.

     Other key points from the summary of opinions:

     --OPINIONS ON MONETARY POLICY 

     -- "In order to strengthen public confidence in continuing with powerful

monetary easing, it is appropriate to clarify forward guidance for policy rates,

such as through making clear the specific period for which extremely low levels

of interest rates will be maintained."

     -- "It is appropriate to consider revising forward guidance for policy

rates, for example, that uncertainties regarding overseas economies have

heightened compared to the time of its introduction."

     --"It is likely to still take time to achieve 2% inflation, it is important

to make clearer the bank's stance of continue with the current powerful monetary

easing."

     -- "It is important to conduct monetary policy, taking into account

developments in economic activity more than before" as employment and wages lag

behind other indicators of economic activity.

     -- "Given that the side effects of monetary easing accumulate as economic

activity undergoes a phase shift, it is necessary to strengthen monetary easing

at this point toward achieving the price stability target at the earliest

possible time."

     --OPINIONS ON ECONOMIC DEVELOPMENTS

     -- "As some leading indicators have given rise to slightly concerns, it is

appropriate to make a somewhat cautious assessment compared to the previous

meeting."

     -- "Whether declines in exports and production will affect employment and

event consumption is important. It is expected to take some time for the

decrease in production to lead to that in consumption. However, there also is a

risk that the scheduled consumption tax hike will bring forward the decline in

consumption."

--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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