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REPEAT: MNI: BOJ Keeps Policy Target; Overseas Demand Firmer

--Board Member Kataoka Dissents for 5th Meeting, Sees Low CPI 
     TOKYO (MNI) - The Bank of Japan board decided Friday 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.
     --SEES MODERATE GROWTH
     The BOJ board maintained its overall economic assessment, saying, "Japan's
economy is expanding moderately, with a virtuous cycle from income to spending
operating."
     It expects the moderate expansion to continue as both exports and
industrial production remain on an uptrend and consumption has been increasing
moderately.
     The board slightly upgraded its view on overseas economies, which "have
continued to grow firmly on the whole." Previously, it said overseas economies
had continued to grow "at a moderate pace on the whole."
     From 1530 to 1615 JST (0630 to 0715 GMT), BOJ Governor Haruhiko Kuroda will
hold a news conference to discuss the board's decision at its two-day policy
meeting that ended just before midday Friday.
     The BOJ is set to keep the shape of the nearly flat bond yield curve (-0.1%
overnight and around 0% in the 10-year zone) for some time to come because the
increase in consumer prices remains slow amid the sustained, moderate economic
recovery.
     --KATAOKA DISSENTS
     As expected, board member Goushi Kataoka dissented for the fifth straight
meeting after taking office in July. He continued to argue that additional
easing would be necessary to achieve the 2% inflation target at an early stage,
but didn't propose any specific policy action.
     In the bank's monetary policy statement, Kataoka was quoted as saying the
BOJ should try to hit the inflation target "in fiscal 2018," and that it was
appropriate for the BOJ to purchase JGBs "so that yields on JGBs with maturities
of 10 years and longer would broadly be lowered further."
     He also sees a low possibility of the year-on-year rate of change in the
core CPI increasing toward 2% "going forward."
     The board left its near-term assessment of inflation conditions unchanged
from the previous meeting on Jan. 22-23, repeating, "Inflation expectations have
been more or less unchanged."
     --WAGE TALKS FOCUSED
     In projecting inflation, the focus is on the response from major firms on
March 14 to labor union demands for wage hikes and better working conditions for
fiscal 2018 starting in April. The results will set the tone for wages paid to
people working for smaller firms.
     Low wage hikes could prompt the board to consider pushing back the
estimated timing of achieving the 2% inflation target again from "around fiscal
2019" at the next key policy meetings in April or July, when the bank releases
its quarterly Outlook Report.
     The report due after the April 26-27 meeting will show the board's new
three-year projections for growth and inflation through fiscal 2020 ending in
March 2021.
     Under the yield curve control framework, the BOJ will seek 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%.
     The BOJ's asset purchases, which are not the main policy target any longer,
will be maintained at the current pace. The outstanding amount of its JGB
holdings will increase about Y80 trillion annually, but the pace has slowed in
light of the recent drop in yields.
     The annual pace of purchases of other assets will also be maintained at Y6
trillion for exchange-traded funds (ETFs), Y90 billion for Japan real estate
investment trusts (J-REIT), Y2.2 trillion for commercial paper and Y3.2 trillion
for corporate bonds.
--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com

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