UPDATE 1-BOJ concerned by yen at Dec 1 meeting – minutes

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

* Dec 1 minutes: forex moves, markets pose risks to economy

* Some said statement on prices would stabilise rates
(Adds more quotes, backgrounds)

TOKYO, Jan 29 (BestGrowthStock) – Bank of Japan policymakers were
worried about sharp yen rises when they adopted a new fund
supplying operation to push down yen borrowing costs last month,
the minutes of the bank’s Dec. 1 emergency meeting showed.

That could be a sign that renewed yen rises may be among the
factors that would trigger fresh action by the BOJ in future.

The BOJ introduced a new funding operation to offer funds for
three months at a cheaper rate at the Dec. 1 meeting, under
pressure from the government to do more to support the economic

Many board members said at the meeting that the most
effective way to do that would be to bring down “term” interest
rates — the rates charged for borrowing money for periods longer
than overnight and up to a year. [ID:nT374859]

The minutes said many board members agreed that volatile
moves in currency markets and falls in global shares could hurt
the Japanese economy.

“The board agreed that introducing a new operation to provide
ample longer-term funds at a very low rate to bring down term
interest rates in markets would be the most effective approach to
support the recovery,” the minutes said.

The government had been pressuring the BOJ to take more steps
to ease deflation, while a surge in the yen to a 14-year high
against the U.S. dollar sparked worries about exports and further
hurt share prices.

The minutes showed one government representative welcomed the
BOJ’s move.

Two government representatives, one from the finance ministry
and the other from the cabinet office, attend BOJ policy
meetings. They cannot vote but can voice opinions and request a
delay in BOJ votes.

At the following meeting on Dec. 17-18, the central bank said
most policy board members would regard inflation of about 1
percent as desirable and the bank would not tolerate zero
inflation. [ID:nT289621]

The minutes of that meeting showed that some board members
said clarifying their view on price stability would help
stabilise interest rates, although one other member said it was
unclear what impact such a statement would have.

The minutes also showed that many members said their views on
price stability had not changed much since the board’s previous
discussion in April and that what had changed was the bank’s
presentation rather than its thinking.

Growth Stocks
(Reporting by Hideyuki Sano; Editing by Hugh Lawson)

UPDATE 1-BOJ concerned by yen at Dec 1 meeting – minutes