REPEAT: MNI 5 THINGS: BOJ Kataoka:Need More Ease To Hit 2% CPI

     OKAYAMA, Japan (MNI) - Bank of Japan board member Goushi Kataoka made the

following points in his speech to business leaders in Okayama City, western

Japan, Thursday. After joining the bank's nine-member board in July, he has

dissented at every policy meeting, although he hasn't formally proposed any

specific policy action.

     -- Additional monetary easing is necessary to achieve the 2% inflation

target at an early stage as the bank's inflation-overshooting commitment

(continuing large-scale easing until the annual inflation rate exceeds 2% and

stabilizes around 2%) "hasn't been sufficient" to clearly increase inflation

expectations.

     Later at a news conference, Kataoka declined comment on how and when he

might propose more easing. He said: "The future policy is up to the developments

in economic, financial and financial market conditions." He said there is no

need to remove the bank's guideline on the annual pace of its Japanese

government bond purchases at "around Y80 trillion" even though the bank has

slowed the pace to around Y50 trillion as the 10-year JGB yield has been

relatively stable around zero percent, the official target.

     -- Kataoka repeated his view that the BOJ should buy Japanese government

bonds so that the yields on JGBs with maturities of 10 years and longer will

broadly be lowered further.

     Later, he told reporters it would not be appropriate to comment on how much

those yields should be lowered at this point.

     -- He also repeated his outlook that "the possibility of the year-on-year

rate of change in the CPI increasing to 2% through fiscal 2019 is low." At its

last policy meeting on Jan. 22-23, the BOJ board maintained its medium-term

growth and inflation projections, repeating what many see as an optimistic

outlook that the bank can hit the inflation target "around fiscal 2019 (to March

31, 2020)."

     -- On the eventual exit from aggressive easing, Kataoka said the BOJ is

still far from considering a change in the current easing stance because

inflation "remains distant from 2%." If the direction of monetary policy is

changed without deep consideration, there is a risk of the economy slipping back

into deflation, he argued.

     -- The government's plan to raise the sales tax further to 10% from the

current 8% in October 2019 could increase downward pressure on prices by

hampering a further widening of the positive output gap and a rise in inflation

expectations. The last sales tax hike, to 8% from 5% in April 2014, caused a

prolonged slump in consumer spending.

--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com