REPEAT: MNI: BOJ Kuroda: Weak CPI Temporary, Analysis in July

Repeats Story Initially Transmitted at 11:16 GMT Jun 15/07:16 EST Jun 15

     TOKYO (MNI) - Bank of Japan Governor Haruhiko Kuroda on Friday blamed

"temporary factors" for the recent weak consumer prices, arguing the momentum

toward achieving the bank's 2% inflation target is intact.

     After a two-day policy meeting, Kuroda also told reporters that the BOJ

board will conduct a "deep analysis" as to why consumer prices remain slow to

respond to tight labor market conditions and the improving output gap, at the

bank's next policy meeting on July 30-31.

     But he quickly added that the BOJ does not need a comprehensive review of

the monetary policy framework, as done in September 2016.

     The key points from Kuroda's news conference.

     * Kuroda repeated his recent remarks that wage and retail price hikes will

spread to more firms in light of a widening positive output gap and a tighter

labor supply, which will increase upward pressure on consumer prices.

     * At its July 30-31 meeting, the nine-member policy-making panel at the

central bank will examine the background of the slow price rises, compared to

labor shortages and a wider positive output gap in the economy (firmer demand

and tighter supply).

     * However, Kuroda said he sees no need for another comprehensive review of

the bank's monetary policy framework, as in September 2016, when the BOJ

switched its easing target to the shape of the bond yield curve from the sum of

cash available for economic activity, based on its wide-ranging review of the

costs and benefits of aggressive easing.

     * The year-on-year rise in the CPI has slowed in recent months as durable

goods prices were lowered by the appreciation of the yen earlier this year and

volatile hotel costs fell in reaction to earlier gains. Kuroda believes these

are temporary factors.

     * The recent rise in productivity in the service sector amid labor

shortages is limiting consumer price rises. Japan's labor productivity is still

low, compared to other major economies, which means downward pressure on prices

may linger.

     * In Japan, during bad times, companies didn't cut salaries of regular

workers. Some firms are posting record profits, but companies in general remain

cautious about raising wages, leading to slow price gains.

     * As for an eventual exit from easing, Kuroda said it is premature to

discuss it at this point but that the BOJ will communicate with market

participants on its exit strategy "at an appropriate time."

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