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--Adds Comments From Briefing in Paragraphs 3-9
     NAGOYA, Japan (MNI) - Bank of Japan Governor Haruhiko Kuroda has clarified
a downward bias in policy rates through new forward guidance, saying the bank's
policy is "further tilted" towards monetary accommodation.
     Despite the bank's easing policy, however, Kuroda told reporters that the
BOJ needed to prevent super long-term interest rates from falling excessively,
as falls would erode investment returns for life insurance firms and pension
     "Short and medium-term interest rates are more effective in stimulating
economic activity and prices," Kuroda told reporters after addressing business
leaders in Nagoya.
     He also said if the government increased the issuance of longer Japanese
government bonds it would prevent super long-term interest rates from falling.
     Fiscal policy would then have a greater impact under the yield curve
control policy which continues to restrict a rise in JGB yields.
     At the latest meeting last week the BOJ board left policy settings
unchanged, forgoing an opportunity to take pre-emptive action.
     The bank maintained its view that the economic recovery was continuing due
to solid domestic demand, although downside risks remained.
     The BOJ did tweak its forward guidance, indicating that it would tolerate
policy rates moving below 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.
     The previous forward guidance was that the BOJ would maintain the current
easing policy until "at least around spring 2020."
     Asked how the BOJ could tolerate the 10-year bond yield falling below
-0.295%, as seen on Sept. 4, Kuroda said: "We don't need to change the current
stance of allowing a wider trading range (of +0.2% to -0.2%) for the 10-year JGB
yield, double unofficial range of +0.1% to -0.1%."
     In July 2018, the bank "strengthened" the framework, allowing a wider
trading range of +0.2% to -0.2% for the 10-year Japanese government bond yield,
double the previous, unofficial range of +0.1% to -0.1%.
     Other Key Points and quotes from Kuroda's speech:
     --"The BOJ clearly related the forward guidance to the momentum toward
achieving the price stability target. The BOJ reflected its policy stance of
being tilted towards monetary accommodation in the forward guidance for the
policy rate as well."
     --"It clarified that there would be a downward bias in the policy rates.
However, I would like to add that the this doesn't limit additional easing
measures to lowering the policy rates."
     --"There is no change in our understanding that, besides lowering the
policy rates, there are various possible measures for additional easing - such
as expanding asset purchases and accelerating the expansion of the monetary base
- depending on developments in economic activity and prices as well as financial
conditions, and that combination or applications of these various measures also
would be an option."
     --"Domestic demand is likely to be firm as the impact of the delay of
overseas economies is expected to be limited."
     --"The BOJ's projection for overseas economies doesn't assume further
deceleration. However, this outlook is based on the assumption that the trade
friction will not intensify further."
     --"There also are uncertainties such as over development in emerging
economies and geopolitical risks. Moreover, attention should be paid to the fact
that global financial markets have become more reactive to these risks."
     --"If such downward risks materialize, positive behavior by firms could
become cautious. Besides risks concerning overseas economies, the impact of the
consumption tax hike continue to warrant attention."
     --"As I have explained, although the degree appears to be small for now,
the BOJ will continue to conduct a careful examination of the impact, including
that on consumer sentiment." 
--MNI Tokyo Bureau; tel: +81 90-2175-0040; email:
--MNI Sydney Bureau; +61 405322399; email:
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