REPEAT:MNI: BOJ Masai: BOJ Must Examine MonPol Benefits, Costs

Repeats Story Initially Transmitted at 02:23 GMT Nov 29/21:23 EST Nov 28

     TOKYO (MNI) - The Bank of Japan must pay careful attention to both the

costs and benefits as its easy policy continues, Bank of Japan board member

Takako Masai said Thursday.

     "While easy policy has effects of stimulating the economy, a prolonged easy

policy will have negative impact on the functioning in government bond markets

and banks' profits," Masai told business leaders in Fukuoka City, southern

Japan.

     Masai voiced some concern over the accumulated negative impact of the easy

policy, but overall didn't see an imminent need to adjust the easy policy to

mitigate the side-effects.

     Other key points from Masai's speech:

     --The BOJ will examine the risks considered most relevant to the conduct of

monetary policy and make policy adjustments as appropriate, taking account of

developments in economic activity and prices as well as financial conditions,

with a view to achieving the price stability target.

     --Masai said that downside risks to overseas economies are increasing, but

she maintains the baseline view that Japan's economy is expected to continue to

expand moderately.

     --Masai emphasized the need to keep a close eye on developments from the

U.S.-China trade dispute, although the impact on Japan's economy was limited. 

     --Japan's prices remain weak, given the continued economic expansion and

tight labor market condition. But upward pressure on prices stemming from the

improving output gap is working steadily.

     --Japan's economy is no longer in deflation, in the sense of a sustained

decline in prices, and the momentum toward achieving the 2% price target is

maintained.

     --It is appropriate for the BOJ to keep that momentum, by maintaining the

easy policy in order to keep the output gap in positive territory.

     --Masai said capital investment remains solid and the impact of natural

disasters on economic activities was temporary.

--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