REPEAT: MNI 5 THINGS: BOJ Mar Minutes: One: Need Fiscal Policy

     TOKYO (MNI) - The minutes of the Bank of Japan's March 8-9 policy meeting

released Monday showed some of the nine board members continued to stress the

need for assessing the costs and benefits of prolonged large-scale monetary

easing while one member called for fiscal stimulus to overcome deflation.

     At its March meeting, the BOJ board decided in an 8-to-1 vote to maintain

its monetary easing stance under the yield curve control framework it adopted in

September 2016. No change in monetary policy was widely expected. The BOJ

believes large monetary stimulus is still needed to guide low inflation around

1% toward its 2% price stability target.

     The key points from the minutes:

     -- One member said that "in a situation where there was not ample room for

additional monetary easing, support from the fiscal policy side was necessary in

order to ensure that the economy overcame deflation." The minutes didn't

identify the member but Deputy Governor Kikuo Iwata had discussed the importance

of fiscal policy in the past. Iwata's five-year term ended on March 19.

     -- Some members pointed out that "it was important to continue to conduct a

multifaceted monitoring and assessment of the positive impact and side effects

of the current monetary easing -- including its effects on the functioning of

financial intermediation and the financial system."

     -- Many members said as there was still a long way to go to achieve the

price stability target of 2%, it was necessary to maintain the current highly

accommodative financial conditions.

     -- Most members shared the recognition that "although it was necessary to

carefully examine the fact that firms' wage- and price-setting stances remained

cautious, the momentum toward achieving the 2% price stability target was being

maintained."

     -- One member noted that the effects of the decline in the long-term real

interest rates on economic activity and prices could be "becoming smaller," due

mainly to the fact that interest rates on many of the new loans extended by

major banks linked to short-term interest rates recently. The member also said

it was important to consider the desirable shape of the yield curve while taking

these changes into account.

     -- A different member said that in considering the desirable shape of the

yield curve, it was necessary to thoroughly examine not only developments in

economic activity and prices but also financial developments. However, the

member said that given the structural problem of overbanking, it was difficult

to stabilize the functioning of financial intermediation and the financial

system only by making adjustments on the monetary policy front.

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