REPEAT: MNI: BOJ Funo: Easy Policy Could Go Beyond Spring 2020

Repeats Story Initially Transmitted at 02:50 GMT Jul 3/22:50 EST Jul 2

--BOJ Will Act In Timely Manner To Hit Price Target

     HIROSHIMA, Japan (MNI) - Bank of Japan board member Yukitoshi Funo said

Wednesday that it is highly possible that the BOJ will maintain the current low

interest rates beyond spring 2020.

     "For an extended period of time, 'at least through around spring 2020'

doesn't mean until spring 2020, it also includes the period after," Funo told

business leaders in Hiroshima City.

     According to Funo, the BOJ will manage its monetary policy in an

appropriate manner to achieve the 2% price target, taking economic and price

conditions into account along with the financial market situation.

     He didn't elaborate on how or when the BOJ would take additional easy

policy.

     At the latest policy meeting held June 19-20, the BOJ left policy

unchanged, restating the forward guidance for policy rates, saying it will

maintain the easy policy "at least through around spring 2020", while noting

Japan's economy continued to expand moderately despite growing downside risks.

     The next policy-setting meeting is scheduled for July 29-30 when the board

updates its quarterly Outlook Report, including growth and inflation forecasts

until fiscal 2021.

     Other key points from Funo's speech:

     --The BOJ needs to maintain current low interest rates to realize the

achievement of the 2% price target and also to keep a positive output gap for as

long as possible.

     --With the output gap remaining positive, firms' stance will gradually

shift toward further raising wages and prices, and households' toleration of

price rises will increase. Medium- to long-term inflation expectations will also

rise, he said.

     --However, Funo warned that it is not easy to change people's mindset and

behaviour, noting wages and prices will not increase easily and it takes time to

change previous practices.

     --Funo said that Japan's exports are expected to remain weak for the time

being on the back of the slowdown in overseas economies, but he laid out an

optimistic view, saying that exports will likely return to a moderate recovery

path.

     ---Japan's prices remain weak compared with an economic expansion and the

tightness of the labour market condition.

     --Future risks facing Japan's economy are various and big and overseas

economies are fragile, and it is necessary to pay close attention to their

impact on corporate and household sentiment.

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com