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REPEAT: MNI: BOJ Lowers Inflation Fcast; Bigger Downside Risks

MNI (London)
Repeats Story Initially Transmitted at 04:07 GMT Oct 31/00:07 EST Oct 31
     TOKYO (MNI) - Following weak inflation readings in the April-September
period, the Bank of Japan board revised down its medium-term inflation
projection for the current fiscal year to 0.9% from the 1.1% outlined in July,
the BOJ quarterly Outlook Report released Wednesday showed.
     The BOJ also lowered their median inflation rate in fiscal 2019 to 1.4%
from the 1.5% seen in July and the median inflation rate in fiscal 2020 was also
lowered to 1.5% from 1.6% previously.
     Other key points from the Outlook Report:
     --The BOJ board remains vigilant over the outlook for inflation rate,
saying, "Risks to both economic activity and pries are skewed to the downside."
     --The BOJ said, "The momentum toward achieving the price stability target
of 2% is maintained but is not yet sufficiently firm, and thus developments in
prices continue to warrant careful attention."
     --Easing of upward pressure on costs on prices stemming from the yen's
appreciation through early spring pushed CPI lower initially, but such downward
pressure has been weakening recently.
     --The BOJ board noted greater downside risk to the economy, saying, "risks
are skewed the downside, particularly regarding developments in overseas
economies." The BOJ had previously seen risks to the economy as largely
balanced.
     --The board's overall assessment of side-effects from the easy policy is
largely unchanged from July, but the board increased its vigilance against the
risks a little.
     --The bank also repeated: "Examining financial imbalances from a
longer-term perspective, there is no sign so far of excessively bullish
expectations in asset markets or in the activities of financial institutions."
     --But the Board warned, "Prolonged downward pressure on financial
institutions' profits, with the low interest rate environment and severe
competition among financial institutions continuing, could create risks of a
gradual pullback in financial intermediation and of destabilizing the financial
system."
     --The BOJ noted these risks are judged as not significant at this point as
financial institutions have sufficient capital bases but "it is necessary to pay
close attention to future developments."
--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
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com

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