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     TOKYO (MNI) - One of the nine Bank of Japan board members emphasized the
need for the BOJ to prepare for downside risks to growth and inflation, the
summary of opinions expressed at the bank's Sept. 18-19 policy meeting and
released Friday showed.
     However, the summary didn't say how the member thought the BOJ should cope
with growing downside risks.
     The board in principle agreed to maintain the current easy policy to
achieve the 2% price stability target but some members noted that the BOJ needs
to pay attention to both positive effects and side-effects of prolonged
large-scale easing.
     At the latest meeting, the BOJ board decided 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," as promised in
July.
     The key points from the summary of opinions:
     --In conducting monetary policy, it is important for the BOJ to prepare for
downside risks to economic activity and prices. In addition, the BOJ should
continue to improve the measures that influence inflation expectations, based on
the recognition that monetary policy, including the expression in related
statements, is somewhat difficult to understand for households and firms in
general in the first place.
     --The momentum whereby an improvement in the output gap leads to a rise in
inflation has been maintained, but it should be noted that it will still take
considerable time for this to change people's perception of prices and thereby
shift the Phillips curve upward.
     --It is gradually becoming clear that the delay in a rise in inflation is
affected by not only a mere demand shortage, but also various factors such as
the persistent deflationary mindset and improvement in productivity stemming
from expansion in supply capacity. Therefore, uncertainties regarding the
outlook for prices have been heightening compared to before.
     --It is necessary to persistently highly accommodative financial conditions
while carefully examining the positive effects and side effects of the current
powerful monetary easing.
     --There is room for the BOJ to consider making its monetary policy more
flexible in the future with a view to maintaining market functioning. However,
taking account of uncertainties over prices, it is essential for the BOJ to
continue with the current monetary policy persistently and cautiously while
taking sufficient care of side effects such as financial imbalances.
--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com