REPEAT: MNI POLICY: BOJ Kuroda Warns of Indirect Trade Impact

     TOKYO (MNI) - Bank of Japan Governor Haruhiko Kuroda said Wednesday the

direct impact of trade disputes on global growth is estimated to be "not so

large," but the indirect impact -- a worsening of business and household

sentiment -- could hurt global and Japanese economies.

     Key points from Kuroda's news conference after the BOJ's two-day policy

meeting. The board decided Wednesday in a 7-to-2 vote to maintain its current

monetary easing stance under the yield curve control framework, vowing to keep

very low interest rates "for an extended period."

     * "The direct impact of protectionism and trade disputes on global trading

volumes seems not to be so large, according to estimates by the IMF and other

international organizations," Kuroda said. "However, if household and corporate

sentiments are affected by trade disputes, they would impede consumer spending

and corporate capital investment, which then would have a big impact on global

trade. We have to pay attention to the risk."

     * Downside risks to Japan's economy in light of growing uncertainties over

global demand caused by the U.S.-China trade row are increasing but the BOJ's

baseline scenario for a modest economic recovery remains unchanged.

     * The BOJ continues to carefully watch the long-term impact of recent

natural disasters in Japan -- rain storms in the southwest and earthquakes in

the north -- as they are hurting tourism.

     * The BOJ continues to persistently maintain the current easy policy in

order to achieve the 2% inflation target. Kuroda sees no need to review the 2%

price stability target, which was set in January 2013 in exchange for the

government's push for fiscal consolidation and structural reforms. Japan's

economy has improved and corporate profits have risen but inflation is still

below 1%.

     * Kuroda said there is no gap in opinion between the BOJ and the government

regarding the side-effects of prolonged monetary easing. There are no signs that

asset prices are overheating at this point but the BOJ will keep a close watch.

It is appropriate that the pace of housing loans extended by regional banks is

slowing.

     * Asked about the possibility of another large financial crisis like the

2008 collapse of Lehman Brothers, the governor said he does not see a limit to

"innovative" policy tools that central banks can create.

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