MNI POLICY: Kataoka: No BOJ Policy Change On New PM

Bank of Japan board member Goushi Kataoka said on Thursday that what the BOJ should implement hasn't changed even though there will be a prime minister.

"Judging from economic climate facing Japan's economy, what the BOJ should do hasn't changed. If necessary, (the BOJ) will stimulate demand and provide liquidity'" Kataoka told reporters via an online conference.

Kataoka also said that the BOJ will need to review its policy framework as the 2% price target hasn't been changed, although he didn't elaborate on how he thought it would happen or on any likely outcome.

Although he hasn't previously proposed such a move at policy-setting meetings, he said it is necessary to lower both short- and long-term policy interest rates to support the economy.He added that the BOJ will not need to implement measures to mitigate against the side-effects of monetary policy, even if the BOJ deepens policy interest rates further into negative territory.

Earlier in the day, Kataoka, in an online speech to business leaders in Naha City, Okinawa, said the BOJ should correlate policy interest rates to a price target and vow to take action if prices deviate from the goal. Lowering the policy interest rates and buying government bonds actively are appropriate to restrict deflationary pressure, he said in the speech.

Kataoka warned that there is the possibility that real interest rates have risen and the degree of accommodative has fallen as the expected inflation rate has dipped amid flattening nominal rates.