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Repeats Story Initially Transmitted at 01:13 GMT Sep 29/21:13 EST Sep 28
--Adds Details From 11th Paragraph
     TOKYO (MNI) - One of the nine Bank of Japan board members called for
considering additional monetary easing to stimulate economic activity ahead of
the sales tax hike planned for October 2019, the summary of opinions presented
at the bank's Sept. 20-21 policy meeting released Friday showed.
     The summary didn't say whether the board member proposed any specific
measures aimed at increasing the already large-scale easing.
     The board member was not identified but Goushi Kataoka, one of the two
board members who took office in July, told the September meeting that the
current easing stance is insufficient to achieve the BOJ's 2% inflation target.
     "As a consumption tax hike is scheduled in October 2019, it is necessary to
further stimulate aggregate demand by additional monetary easing so that the
price stability target will be achieved in a stable manner," the member said.
     The board also discussed the need to ease policy further in the event that
geopolitical risks were to intensify. "The BOJ needs to bear in mind that, if
geopolitical risks rise further, it may consider making policy adjustments as
appropriate to prevent a deflationary mindset from reemerging."
     At the meeting, the BOJ board decided in an 8-to1 vote to maintain its
current monetary easing stance under the yield curve control framework it
adopted about a year ago.
     Kataoka dissented, arguing current policy was insufficient to meet the 2%
policy goal by the current target date of sometime in fiscal 2019, according to
the BOJ's policy statement following its meeting.
     He was quoted as citing "an excess supply of capacity in the capital stock
and the labor market" as the reason for his objection but the statement didn't
show he made any counter-proposals to address the issue.
     In July, the BOJ pushed back the timeframe for hitting the 2% inflation
target to "around fiscal 2019" from the previous estimate of "around fiscal
2018." It was the sixth delay since the bank began aggressive easing in April
     Kataoka also opposed the description of the board's inflation outlook.
     One member repeated the official line often presented by Governor Haruhiko
Kuroda: "The effects of the monetary easing policy under the current framework
will be further enhanced going forward through a rise in the natural rate of
interest and a decline in real interest rates, as Japan's economy increases its
growth potential and the inflation rate rises."
     The board acknowledged the challenge facing the BOJ.
     "Given the current level of the inflation rate, it is possible that it will
take some time to achieve the price stability target.  The longer this takes,
the higher the uncertainty in the external environment," one member said. 
     "Going forward, it is necessary to take into account both the
sustainability of the policy and the time constraint in achieving the target."
     The board was generally optimistic about the prospect of more firms passing
higher materials and labor costs onto their sales prices, supporting price gains
toward a stable 2%, after Takehiro Sato and Takahide Kiuchi have left the board
in July a the end of their five-year terms. The two were skeptical about the
effect of aggressive easing on boosting inflation and warned about side-effects
of massive asset purchases.
     "Mainly in labor-intensive sectors such as eating and drinking services,
there has been a gradual but steady increase in cases where firms are making
efforts to raise their prices and other firms are following suit," the summary
     "It is likely that firms will eventually need to reflect in their sales
prices the increased costs that they cannot absorb through labor-saving
investment or streamlining of their business processes." 
     There was one cautious view: "The year-on-year rate of change in the CPI
(all items less than fresh foods) is likely to increase gradually toward 2%.
However, reaching 2% is likely to take some time as firms' deflationary mindset
has been persistent and their price-setting stance has been cautious."
--MNI Tokyo Bureau; tel: +81 90-2175-0040; email:
--MNI Tokyo Bureau; tel: +81 90-4670-5309; email:
--MNI BEIJING Bureau; +1 202-371-2121; email:

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