REPEAT: MNI: BOJ Keeps Policy Target, No 2% CPI Timeframe

     TOKYO (MNI) - The Bank of Japan board decided Friday in an 8-to-1 vote to

maintain its cautiously stimulative monetary easing stance under the yield curve

control framework while dropping its estimate on when it can achieve the

increasingly evasive 2% inflation target.

     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 but the majority of the board also thinks additional

easing is unnecessary as long as the path toward the target remains intact.

     --NO CPI TIMEFRAME

     In its quarterly Outlook Report released after the BOJ's two-day policy

meeting that ended at 1156 JST (0256 GMT) Friday, the BOJ didn't say when the

board believed the central bank could anchor inflation around 2%.

     It was the first policy meeting after Kuroda began his second five-year

term on April 9.

     Announcing the timeframe for hitting the target has become meaningless as

it has been pushed back so many times and Japan is still only halfway toward

stable 2% price rises.

     BOJ Governor Haruhiko Kuroda has been also saying delaying the timeframe

for achieving the inflation target does not mean the central bank will have to

conduct additional easing.

     In the last report issued in January, the BOJ said the 2% target was

expected to be achieved "around fiscal 2019" but many private economists

forecast the core consumer price index (excluding fresh food) will rise only

about 1% on year in that year.

     Until January, the BOJ had always provided the timeframe for achieving its

price stability target since it began aggressive easing in April 2013.

     In the Outlook Report, the BOJ continued to point to the headwind for its

efforts to raise inflation in an economy where the shrinking population is

slowing consumption and people are used to price cut competition among

retailers.

     "The mindset and behavior based on the assumption that wages and prices

will not increase easily have been deeply entrenched among firms and

households," the BOJ said.

     "Firms have been making efforts to absorb a rise in labor costs by

increasing labor-saving investment and streamlining their business process,

while limiting wage increases -- which correspond to the labor shortage --

mainly to part-time employees."

     But the BOJ also noted that the pressure on firms to raise prices is

increasing amid serious labor shortages in some sectors and rising raw material

costs.

     --OUTLOOK LITTLE CHANGED

     The BOJ's medium-term economic outlook is little changed from January, when

the previous Outlook Report was issued.

     "Japan's economy is expanding moderately, with a virtuous cycle from income

to spending operating," the BOJ said, repeating its recent assessment. "With

regard to the outlook, Japan's economy is likely to continue its moderate

expansion."

     "From fiscal 2019 through fiscal 2020, the economy is expected to continue

on an expanding trend supported by external demand, although the growth pace is

projected to decelerate due to a cyclical slowdown in business fixed investment

and the effects of the scheduled consumption tax hike (in October 2019)," it

said.

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