UPDATE: MNI: BOJ Amamiya: Eyes Most Timely Policy As Others Do

--Adds Comments From Briefing in Paragraphs 3-9

     KAGOSHIMA, Japan (MNI) - Bank of Japan Deputy Governor Masayoshi Amamiya

said Thursday that the BOJ as well as other central banks will conduct policy as

appropriate, without preconceptions.

     Packages of various measures, such as lowering short- and long-term

interest rates, expanding asset purchases and accelerating the expansion of the

monetary base, are possible, Amamiya told business leaders in Kagoshima City.

     Asked later about how and when the BOJ will judge the necessity of

additional easy policy, Amamiya told journalists that the momentum toward

achieving the 2% price target and the mechanism of pushing up prices are the

important factor in deciding on additional easy policy.

     But he didn't offer exact scenarios such as a worsening of the momentum

measured by the output gap or inflation expectations as prompting the BOJ to

consider additional easy policy.

     Regarding a decision for additional easy policy, Amamiya said, "(The BOJ)

will pay great attention to both the benefits and costs of easy policy."

     When asked about additional benefits and costs to be caused by more easing,

Amamiya, said "It is difficult to in advance identify the benefits and costs of

easy policy as both could change, depending on the situation at that time."

     He also said that the BOJ will continue to carefully explain how the BOJ

judges its economic assessment and the risks facing Japan's economy.

     Amamiya noted that if the 10-year bond yield moves sharply beyond an

unofficial range of -0.20% to +0.20%, widening the range could be one option.

     The deputy governor also said that the rate cut by the U.S. Federal Reserve

will have positive impact on the global economy as well as Japan's economy.

     The BOJ backed away from pre-emptive easing measures Tuesday, leaving

policy unchanged, as the economy continues its moderate expansion, underpinned

by solid domestic demand, although it admitted to greater downside risks to both

activity and prices.

     The BOJ warned, "In particular, in a situation where downside risks to

economic activity and prices, mainly regarding developments in overseas

economies, are significant."

     The bank added that it would "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."

     Other key points from Amamiya's speech:

     --"The BOJ is no different from other central banks, in that it is prepared

to take, if necessary, policy responses in order to prevent the risks from

materializing, while closely monitoring them."

     --BOJ policy decisions will not be directly influenced by the policy stance

of other central banks but the BOJ needs to keep a close eye on how policy

decisions by other central banks affect Japan's economic and price conditions

through developments of market moves.

     --"The BOJ will take the most appropriate policy responses depending on the

situation at the time, while weighing their benefits and costs and also taking

full account of the viewpoint of preventing the materialization of a risk that

the momentum toward achieving the price stability target will be lost."

     --"It is also important for the BOJ to examine the risks concerning

overseas economies and how these will affect Japan's economic activity and

prices."

     --"Attention should be paid to the possibility that the inflation momentum

would be lost through, for example, shrinkage of the output gap or fluctuations

in financial markets if risks to economic activity were to materialize,

particularly regarding overseas economies."

     --"There are two important points in making an assessment of the outlook.

The first is how overseas economies will pick up. The second point is the

sustainability of domestic demand in the meantime."

     --"Downside risks concerning overseas economies have remained significant,

and uncertainties regarding the effects of protectionist moves in particular

have been heightening."

     --"It is necessary to pay attention to the risk that, if uncertainties

concerning overseas economies heightening further going forward, domestic and

foreign economies will be affected widely."

     --"Although the effects of the scheduled consumption tax hike warrant

attention, they are projected to be smaller this time compared to those of the

previous hike in 2014, partly due to a smaller burden for households from the

tax hike and various measures introduced by the government to smooth out demand

prior to and after the hike."

--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

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