UPDATE: MNI: BOJ Kuroda: No Time Limit in Seeking 2% Inflation

--Adds Comments From Q&A At Bottom

     TOKYO (MNI) - Bank of Japan Governor Haruhiko Kuroda said Thursday that BOJ

policymakers do not have any rigid time limit in mind in their efforts to guide

low inflation to a stable 2% "at the earliest possible time" by persistently

continuing large-scale monetary easing.

     He also told a seminar that the current positive growth cycle -- in which

higher corporate profits will create more jobs, push up wages and led to higher

inflation -- must be maintained to turn around the deflationary mindset among

firms and households that is "more deeply entrenched than expected."

     "The bank has been conducting monetary policy while examining whether the

momentum toward 2% inflation is being maintained, taking into account

developments in economic activity and prices as well as financial conditions,"

Kuroda said.

     "The bank has not set a specific deadline for achieving 2% inflation and

does not conduct monetary policy with such a deadline in mind."

     When the BOJ began aggressive easing in April 2013, Kuroda declared that

the central bank would end constant price drops and achieve the 2% inflation

target in about two years by doubling the amount of cash available for economic

activity.

     However, the plunge in crude oil prices in mid-2014 and a prolonged

consumption slump in Japan caused by the sales tax hike in April that year

pushed the annual inflation rate back down to zero from 1.5%.

     This has led the BOJ to delay the estimated timing of achieving 2%

inflation six times through last year. The latest outlook was to hit the target

"around fiscal 2019" but at its April 26-27 meeting, the BOJ board decided to

stop publishing its estimate on when it can achieve the 2% inflation target in

order to "dispel the misunderstanding" among some market participants that a

delayed timing would prompt the bank to conduct additional easing, Kuroda told

reporters after the meeting.

     Other key points from his speech:

     * The BOJ has not changed its basic assessment that prices have continued

to show relatively weak developments compared to the economic expansion and the

labor market tightening. But the momentum toward achieving the price stability

target of 2% is "firmly maintained."

     * It is important for the mechanism -- actual price increases lead to a

rise in longer-term inflation expectations -- to operate "more clearly" toward

achieving the 2% price target.

     * There is a certain time lag before actual inflation affects inflation

expectations and the length of this lag is "highly uncertain."

     * In response to questions, Kuroda repeated his recent remarks that

discussing at this point the specifics of how to eventually reduce the degree of

easing "would confuse the markets."

     * It is hard to assess the net impact of higher energy costs on the

Japanese economy by just looking at the level of crude oil prices, Kuroda said

during the Q&A session. Higher crude oil prices worsen the terms of trade for

energy-importing economies but the recent rise in crude oil prices reflect not

only heightened geopolitical risks but also firmer global demand, which should

have a positive impact on Japanese exports, he said.

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

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