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REPEAT: MNI: BOJ On Hold; Keep Easy Policy Through Spring '20

MNI (London)
Repeats Story Initially Transmitted at 03:17 GMT Jul 30/23:17 EST Jul 29
--BOJ Will Not Hesitate To Take Additional Easing Measures
--BOJ Voted 7-2 To Keep Policy Unchanged
     TOKYO (MNI) - The Bank of Japan backed away from any pre-emptive easing
measures Tuesday, leaving policy unchanged, as the economy continues to expand
moderately, underpinned by solid domestic demand, although it admitted to
greater downside risks to both activity and prices.
     "The bank will not hesitate to take additional easing measures if there is
a greater possibility that the momentum toward achieving the price stability
target will be lost," the BOJ said in the accompanying statement as a nod to
those risks.
     "In particular, in a situation where downside risks to economic activity
and prices, mainly regarding developments in overseas economies, are
significant," the BOJ added.
     --GLOBAL SLOWDOWN
     The impact from the slowing global economy is limited to certain
manufacturers and hasn't spilled over into capital investment and private
consumption, with the economy not yet deviating from the recovery path.
     Looking ahead, if there is a prolonged slowing of the global economy,
domestic demand will lose momentum, increasing pressure on the BOJ to consider
additional easy policy measures.
     The decisions reflected the BOJ assessment that Japan's economy will follow
its baseline recovery scenario for now, although sustained uncertainties over
global growth continue to weigh on the outlook.
     --UNCHANGED
     On the monetary policy, the Board decided voted 7-2 to stand pat on the
yield curve control policy and the asset purchases, maintaining its recovery
scenario as domestic demand remains solid, supporting the recovery mechanism.
     The key points from the BOJ board decision after the latest two-day policy
meeting:
     --Under the yield curve control framework adopted in September 2016, the
BOJ will keep the target for the overnight interest rate at -0.1%.
     -- The BOJ will continue buying JGBs to stabilize the 10-year yield "around
zero percent" but it will also allow the long-term interest rate to "move upward
and downward to some extend" in line with the changes in economic growth and
inflation.
     --The BOJ also left the scale of its purchases of ETFs (exchange-traded
funds) and J-REITs (Japan real estate investment trusts) unchanged at about Y6
trillion and about Y90 billion, respectively.
     --Officially, the BOJ will maintain the annual pace of its JGB purchases at
around Y80 trillion, although the pace has declined sharply, as the accumulated
effects of keeping rates lower through asset purchases have intensified. The
bank noted it will conduct purchases "in a flexible manner."
--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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