--Japan BOJ Hayami says no risk of deflation spiral now
--Japan BOJ Hayami says there are downside risks in economy
--BOJ Hayami: Japan central bank will try to make easing more efficient
--Japan BOJ Hayami says tempo of econ recovery has slowed
--Japan BOJ Hayami says watching price movements carefully

By Stephen Cannon, BridgeNews
Tokyo--Feb. 8--Bank of Japan (BOJ) Governor Masaru Hayami Thursday indicated clearly that he will resist government pressure to implement additional monetary easing at the BOJ's policy board meeting Friday even as the slowdown in the United States threatens to snuff out Japan's tenuous economic recovery.
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"We will maintain our current monetary stance in order to support the economic recovery through monetary policy," Hayami said in response to questions in parliament after the Nikkei 225 Stock Average broke below 13,000 for the first time since October 1998.
Finance Minister Kiichi Miyazawa, who generally keeps quiet on monetary policy out of respect for the central bank's independence, Wednesday suggested quantitative monetary easing might be an effective policy measure.
Hayami said the BOJ will pay careful attention to declining prices and cited two main factors behind price declines: the demand side, in relation to the economy's only gradual recovery; and the supply side, related to technological advancements, deregulation and corporate rationalization. "The question is whether these price falls will put pressure on corporate profits and lead to a negative spiral in prices and the economy. Corporate profits are continuing to improve, and employment and wages, although in a severe state, have firmly bottomed out. I don't see any risk of a renewed deflationary spiral strengthening," Hayami said.
However, Hayami also said the BOJ must pay close attention to downside risks in the economy from factors such as the effects from overseas economies' performance as well as changes in domestic demand and financial markets.
Hayami said that at the Friday policy board meeting board members "must do their utmost to ensure the smooth functioning of financial markets and stability in their form."
Speaking on possible measures that the central bank will release Friday to improve liquidity in financial markets, Hayami said, "It has been decided that we will consider methods of improving providing liquidity to the markets. I place deep meaning in this to create the greatest monetary easing impact from current BOJ policy." End
Copyright 2001 Bridge Information Systems Inc. All rights reserved. [B] xxxJapan BOJ Hayami favors maintaining monetary policy stance --Japan BOJ Hayami: Corp reform, productivity boost needed for recovery Hayami said that looking at the past year or so although fiscal spending has declined corporate activity has increased little by little.
"The most important thing is to make sure the economy sticks to the path of recovery led by the private sector while keeping the effects of fiscal policy management in view. It's important to increase productivity and in order to do that it's necessary for private enterprise to continue structural reforms. We want to support that on the monetary side too," Hayami said.
Hayami said that the uncertain outlook for the future of the economy is darkening the sentiment of markets and companies and that the central bank will take caution on this issue.
Offering a somewhat different perspective on how to tackle Japan's economic woes, Miyazawa said speaking earlier in parliament that the government must solve the problem of high unemployment in order to console consumers enough to increase spending.
Copyright 2001 Bridge Information Systems Inc. All rights reserve