HIGHLIGHTS-BOJ Shirakawa: Upside, downside econ risks balanced

(For more stories on the Japanese economy, click [ID:nECONJP])

TOKYO, Nov 5 (BestGrowthStock) – Bank of Japan Governor Masaaki
Shirakawa said on Friday he saw upside and downside risks to
Japan’s economy as being evenly balanced.

Shirakawa also repeated that expanding the central bank’s 5
trillion yen ($61.92 billion) asset buying scheme would be a
strong policy option if economic conditions deteriorated.

Following are key quotes from Shirakawa’s news conference:

RISKS TO ECONOMY

“Risk factors have remained unchanged from those pointed out
in our outlook report. On the economy, there are upside risks
from strengthening of emerging and commodity-exporting countries
while attention should be paid to downside risks as high
uncertainty remains, mainly in the United States.

“There is a possibility that prices in Japan will rise more
than expected due to a rise in commodity prices on the back of
high growth in emerging and resource-exporting countries. There
is also a risk that the rate of inflation will fall due to a
decline in medium- and long-term inflation expectations.

“These risk factors regarding the economy and prices are
balanced on both the upside and downside.”

ASSET-BUYING FUND

“We will start buying such risk assets for the first time,
but if economic and price conditions deteriorate in the future
and if we judge effects will beat side-effects after examing
them, it would be a strong option to expand this fund to further
bring down longer market interest rates and reduce the risk
premium.”

FED BOND BUYING

“The biggest reason for uncertainty about the U.S. economic
outlook is that the country’s balance sheet adjustments following
a big bubble bursting will likely take a long time …

“The Federal Reserve has just decided on asset buying … But
the fundamental uncertainty about the U.S. economy will not
immediately disappear …

“It is not appropriate to simply link the amount of
government bond issuance to central bank bond buying to say
whether debts are monetised or not. The important thing is on
what principle central bank policy is managed and whether there
is enough confidence in policy.

“Just like Fed Chairman (Ben) Bernanke, I do not
think at all what the Fed is doing is debt monetisation.”
(Reporting by Leika Kihara, Tetsushi Kajimoto and Rie Ishiguro;
Editing by Michael Watson)

HIGHLIGHTS-BOJ Shirakawa: Upside, downside econ risks balanced