HIGHLIGHTS 3-BOJ Shirakawa: aware of risks abroad,view unchanged

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NAGOYA, Japan, Nov 29 (BestGrowthStock) – Bank of Japan Governor
Masaaki Shirakawa said on Monday he was aware of downside risks
in the U.S. and European economies but there was no urgency to
change views on the risks facing the Japanese economy.

Following are key quotes from Shirakawa’s speech to business
leaders in Nagoya, central Japan, a subsequent question and
answer session, and a news conference.

INTEREST RATES

“Japan’s long-term rates have somewhat risen, reflecting U.S.
long-term rate moves …

“But so-called term rates such as TIBOR and LIBOR have
declined and spreads between corporate and government bonds have
shrunk. The effects of the BOJ’s asset-buying scheme have thus
been visible in long-term rates and bond spreads as well as rises
in REITs (real estate investment trusts).

“Treasury yields have risen after the Federal Reserve started
its new Treasury purchase programme, but if we compare the
current situation with the one without the programme, the
programme has helped lower rates … Similarly, the BOJ’s
government bond buying is having intended effects.”

ECONOMIC RISKS

“There are slight differences in how each of the nine BOJ
Policy Board members views the economy but overall we judged that
the (upside and downside) economic risks are roughly in balance
in our October outlook report …

“We will again make our judgment at the next monetary policy
meeting (on Dec. 20-21) based on new economic data. At present, I
don’t feel the need to change in a major manner our judgment that
economic risks are roughly in balance.”

BOJ POLICY

“The BOJ will examine the effects and drawbacks of the
asset-buying scheme and if we judge that the effects are greater
than the drawbacks and if economic conditions turn out to be
harsher than our assumption … we consider an increase in the
asset buying to be one policy option …

“We are aware of the possibility the Japanese economy will
shrink in October-December but our forecasts (of growth for the
full fiscal year) are as announced in the outlook report in
October …

“We have to avoid a situation where we lose flexibility in
policymaking by sticking to certain economic forecasts. We have
no preconceptions about future policy and will pay attention to
uncertainties.”

DEVELOPED ECONOMIES

“In the United States and advanced European economies the
process of dealing with excessive household debt, excess
production capacity and balance sheet adjustment in the financial
sector is continuing, and in these circumstances the virtuous
cycle of production, income and spending growth will not operate
properly …

“We are mindful that developed countries’ economies are
unlikely to see much upward momentum and will be prone to
downward swings until balance sheet adjustments are completed.”

EMERGING ECONOMIES

“Emerging economies have expressed heightened concern and
anxiety about the overheating of their economies due to the
acceleration of capital inflows …

“Should one or more emerging economies experience a rise and
subsequent bursting of a bubble, this would … affect the global
economy as a whole.”

YEN

“Following the Fed’s decision on additional monetary easing
in early November, the yen has depreciated somewhat against the
dollar …

“The BOJ examines foreign exchange rate developments and
their effects in detail and with great interest.”
(Reporting by Rie Ishiguro; Editing by Michael Watson)

HIGHLIGHTS 3-BOJ Shirakawa: aware of risks abroad,view unchanged