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

Repeats Story Initially Transmitted at 03:58 GMT Apr 25/23:58 EST Apr 24

     TOKYO (MNI) - The Bank of Japan kept monetary policy unchanged Thursday, as

Japan's economy is still expanding moderately despite persisting downside risks

to both activity and prices.

     But the BOJ clarified its forward guidance for policy rates, saying, "the

BOJ intends to maintain the current extremely low levels of short- and long-term

interest rates for an extended period of time, at least through around spring

2020, taking into account uncertainties regarding economic activity and prices

including developments in overseas economies and the effects of the scheduled

consumption tax hike."

     On the monetary policy, the board decided voted 7-2 to stand pat on its

yield curve control policy and asset purchases, maintaining its recovery

scenario as domestic demand remains solid and therefore supporting an economic

recovery mechanism.

     The key points from the BOJ board decision after the latest two-day policy

meeting:

     --The BOJ board decided to expand eligible collateral for the BOJ's

provision of credit.

     --With regard to debt of companies that have obtained an external credit

rating, the companies should be rated BBB or higher by an eligible rating

agency.

     --The BOJ will relax the terms and conditions for the SLF (Securities

Lending Facility), including the reduction of the minimum fee rate and abolition

of the upper limit on the amount of sales per issue.

     --the BOJ will consider the introduction of an ETF lending facility, which

will make it possible to temporarily lend ETFs that the BOJ holds to market

participants.

     --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.

     -- Officially, the BOJ will maintain the annual pace of its JGB purchases

at around Y80 trillion, although the pace has declined sharply, as accumulated

effects from keeping rates lower through asset purchases have intensified. The

bank noted it will conduct purchases "in a flexible manner."

     -- On forward guidance, board member Yutaka Harada, a former government

economist, dissented, arguing that it was appropriate to further clarify its

relationship with the price stability target. Goushi Kataoka, a former

private-sector economist, was also opposed. He said that it was necessary for

the BOJ to make a commitment to take additional easing measures if it revised

downward its assessment of medium- to long-term inflation expectations.

--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