UPDATE 1-BOJ head warns inflexible FX may delay adjustment

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

* Shirakawa warns of slow Japanese economic growth ahead

* Won’t comment directly on policy, post-Fed market move

* BOJ kicks off rescheduled two-day rate review ending Friday

* BOJ likely to keep policy on hold with yen gains subdued

By Leika Kihara and Rie Ishiguro

TOKYO, Nov 4 (BestGrowthStock) – Inflexible currency regimes
maintained by emerging economies may delay necessary adjustments
in global imbalances, Bank of Japan Governor Masaaki Shirakawa
said on Thursday.

Shirakawa also warned that Japan’s economy will experience
some slowdown in exports and output ahead, suggesting the central
bank will keep monetary conditions loose and consider further
easing if risks to growth increase.

The BOJ starts its two-day meeting later on Thursday and many
analysts expect the central bank to keep policy settings
unchanged after the Federal Reserve’s monetary easing the day
before broadly met expectations and had little impact on the yen.

“Japan’s economy appears to be heading toward a moderate
recovery. But improvements are weakening due to slowing growth in
exports and output,” Shirakawa told a seminar before attending
the BOJ’s rate review.

The Japanese central bank pushed forward its meeting from
mid-November to speed up the launch of its 5-trillion-yen ($61.88
billion) asset buying scheme announced early last month.

The governor did not comment directly on the outlook for
monetary policy or market moves following the Fed’s announcement
that it would buy $600 billion in government debt to support a
struggling U.S. economy.

Shirakawa said the difference between sluggish growth in rich
economies, which are still struggling with balance sheet
adjustments, and fast-growing emerging nations was heightening
uncertainty over the global economic outlook.

“If currency rates, which serve as a means for adjusting
imbalances, lack flexibility, that could delay necessary
adjustments” he said.

The United States and European countries have criticised
Beijing for keeping its currency, the yuan, artificially low to
give the country’s exports an unfair trade advantage.

China and other emerging countries, in turn, have blamed
extremely loose monetary policies in advanced economies for
triggering a flood of capital into their economies and pushing up
their currencies.

Group of 20 finance leaders last month agreed on the need to
reduce “persistently large” current account surpluses and
deficits, but failed to agree on specific targets as a percentage
of gross domestic product. [ID:nTOE69M01E]

The topic will likely gain centre stage this weekend when
APEC finance leaders gather in Japan and next week, when G20
leaders hold a summit in South Korea.
(Editing by Tomasz Janowski)

UPDATE 1-BOJ head warns inflexible FX may delay adjustment