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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

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