REPEAT: MNI: BOJ Dec Minutes: Some: Watch Easing Side-Effects

Repeats Story Initially Transmitted at 06:34 GMT Jan 26/01:34 EST Jan 26

     TOKYO (MNI) - Some Bank of Japan board members called for a close watch on

the side-effects of prolonged large-scale monetary easing on the economy and the

financial system, the minutes of the bank's Dec. 20-21 policy meeting released

Friday showed.

     However, most of the nine members continued arguing that the BOJ must

persistently maintain the current easing stance as the bank is still far from

achieving its 2% inflation target.

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

multifaceted monitoring and assessment of the positive impacts and side effects

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

functioning of financial intermediation and the financial system," the minutes

said.

     "One member noted that, in the course of the inflation rate increasing

toward 2% and the economy's medium- to long-term growth potential rising going

forward, the effects of monetary easing measures would be enhanced; therefore,

in conducting monetary policy, it would be necessary to take into account such

changes in the environment as well as the side effects of the measures."

     After the latest policy meeting on Jan. 22-23, BOJ Governor Haruhiko Kuroda

told reporters that the need to review the bank's massive ETF (exchange-traded

funds) purchases was a minority opinion among the board expressed at the

December meeting.

     The December minutes said, "Most members shared the recognition that it was

appropriate for the BOJ to persistently pursue powerful monetary easing under

the current guideline for market operations."

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

2% inflation target, it was necessary to maintain the current highly

accommodative financial conditions.

     Most members said the BOJ must carefully watch firms' generally cautious

stances on raising wages and retail prices, but they also noted that the

momentum toward achieving the 2% target was being maintained.

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

maintain its current monetary easing stance under the yield curve control

framework it adopted in September 2016.

     Under the yield curve control framework, the BOJ is seeking to stabilize

the 10-year government bond yield, the benchmark for long-term borrowing costs,

at around zero percent and keep the overnight interest rate at -0.1%.

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