UPDATE: MNI POLICY: BOJ Amamiya: Timely Action; Large Risks

--Adds Comments From Briefing, Backgrounds in Paragraphs 5-11

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

that maintaining an accommodative policy stance is appropriate, and the BOJ will

take additional easing measures without hesitation if they are considered

appropriate.

     In a speech to business leaders in Okayama City on Thursday, Amamiya said

the BOJ must pay attention to the effects and side-effects of more easing, but

gave no details of any possible future measures.

     "If the materialization of the risks leads to a longer delay in the timing

of a pick-up in the global economic growth pace or to a further deceleration in

the global economy, Japan's economy inevitably will be affected," he said.

     Amamiya is BOJ Governor Haruhiko Kuroda's right hand advisor and his

comments on the outlook for monetary policy are believed to reflect Kuroda's own

views.

     Amamiya told reporters that domestic demand remains solid but the impact of

weak exports and production is impacting on some manufacturers, but he expects

solid domestic demand will be maintained.

     He added that the BOJ needs to examine developments in major economic

factors, such as the recent tax hike and typhoon.

     "It takes time to accumulate data and to examine the underlying trend of

economic data. But the basic scenario is that private consumption will remain

solid and capex from the long-term perspective in addition to the government

economic stimulus measures," he said, adding that the BOJ must carefully watch

economic data.

     Amamiya said that the recent movements in Japanese government bond yields

are largely consistent with the framework of the yield curve control policy.

     The 10-year Japanese government bond yield rose to zero percent on Tuesday,

to the highest level since March 6.

     Amamiya said that he sees no need to review the policy framework now, and

believes the current easing policy is sustainable.

     The U.S. Federal Reserve's decision to keep its policy rate unchanged

reflected the health of the U.S. economy, which in turn will have a positive

impact on the global economy as well as Japan.

     At the latest policy meeting on October 30-31, the BOJ left policy

unchanged, rejecting the chance to take some insurance and take pre-emptive

policy action.

     The BOJ did, however, tweak its forward guidance, indicating that it would

tolerate policy rates moving below the current levels.

     "As for the policy rates, the BOJ expects short and long-term interest

rates to remain at their present or lower levels as long as it is necessary to

pay close attention to the possibility that the momentum toward achieving the

price stability target will be lost," the BOJ said in October.

     Other key points from Amamiya's speech:

     --"Prices could be affected to some extent through downward pressure on the

output gap, which is one of the important factors that determine price

developments."

     --"The BOJ considers that downside risks to economic activity and prices,

mainly regarding developments in the global economy, will continue to warrant

close monitoring, and thus the policy stance of being titled toward monetary

accommodation will be appropriate for the time being."

     --"The BOJ will continue to carefully examine various risks and 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."

     --The BOJ expects the global economic growth rate to rise moderately

through mid-2020.

     --"Although signs of a pick-up in the global economy have started to be

observed gradually, uncertainties over the outlook continue to warrant attention

and the BOJ is cautious about future developments."

     --Amamiya warned, "If firms have to keep paying attention to risks

concerning the global economy for a prolonged period, it could take longer than

expected for their fixed investment stance to become active again." 

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

--MNI Sydney Bureau; +61 405322399; email: lachlan.colquhoun.ext@marketnews.com

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