REPEAT: MNI: BOJ Kuroda: Oseas Downside Risk Up; Act If Needed

Repeats Story Initially Transmitted at 07:52 GMT Jan 23/02:52 EST Jan 23

     TOKYO (MNI) - Bank of Japan Governor Haruhiko Kuroda said Wednesday that

downside risks to overseas economies are strengthening and the BOJ must

carefully watch for any impact on domestic firms' and households' sentiment.

     Kuroda told reporters that the BOJ will conduct additional easy policy if

needed, although he didn't elaborate on what kinds of further policy the BOJ

would undertake.

     Earlier in the day, the BOJ kept monetary policy unchanged, maintaining the

view that Japan's economy is expanding moderately despite emerging downside

risks. The BOJ vowed to keep the current easy policy "for an extended period of

time."

     In the quarterly Outlook Report, published alongside the meeting outcome,

the BOJ revised down its inflation projection for fiscal 2019 to 0.9% from the

1.4% presented in October. The downgrade came following a run of weaker than

expected price data and downward pressure from the fall in crude prices on

consumer prices.

     The BOJ board also lowered the median inflation rate forecast for fiscal

2020 to 1.4% from 1.5% made in October. They maintained their assessment that

the momentum toward achieving the 2% price target is maintained, although it

isn't sufficiently firm and it remains vigilant against the outlook for

inflation rate, saying, "Risks to both economic activity and prices are skewed

to the downside."

     Other key points from Kuroda's presser:

     --"Downside risk to overseas economies is strengthening." But Kuroda said

he doesn't see the economic evidence or "hard economic data" that will prompt

the BOJ to change the baseline scenario that Japan's economy is likely to expand

moderately now. "Japan's economy is likely to continue on an expanding trend

through fiscal 2020," he said.

     --The downward revision of the board's inflation projection in fiscal 2019

is due mainly to the impact of the fall in crude oil price. "The drop in

(Japan's) prices to be caused by the drop in crude oil prices is be temporary."

The inflation projection in fiscal 2019 was revised down to +0.9% from +1.4%

made in October.

     --When asked about the impact of lower consumer prices on inflation

expectations, Kuroda said the impact may not be as big as seen in 2014 and 2015.

     --"The recent drop in crude oil prices is different from the big drop" seen

2014 and 2015 and the recent drop is temporary. But the BOJ needs to keep a

close eye on inflation expectations as the bank sees large downside expectation

risk.

     --"It takes time to achieve the 2% price target and (the BOJ) ensures the

sustainability of easy policy" to achieve the price stability target. The BOJ

"needs to keep a positive output gap as long as possible to achieve the 2% price

target."

     --The momentum toward achieving the 2% price target is maintained as the

output gap continues improving and medium- to long-term inflation expectations

have been changed.

     --Global financial markets, especially stock prices and foreign exchange

rates, earlier this year were relatively unstable but the corporate profit

outlook remains solid in Japan and the U.S. "economic fundamentals didn't change

and the markets seemed to have overreacted to the outlook view."

--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