--BOJ report: Econ adjustment likely to intensify
--BOJ report: Corporate profit situation remains severe
--BOJ report: Capital spending seen to fall
--BOJ report: Econ adjustments may spread further
--BOJ report: Downward pressure on prices may increase
--BOJ report: To closely watch economic risk factors
--BOJ report: Industrial output continues to fall
By Hiroshi Inoue Tokyo, June 18 (BridgeNews) - The Bank of Japan on Monday slightly downgraded its economic assessment for June, compared to its May report, the central bank said Monday. The June report said there is a strong likelihood that economic adjustments will continue and there is risk that they will spread further if the weakness in overseas economies continues.
"Adjustments in economic activities are gradually intensifying as production is declining substantially reflecting a fall in exports," the BOJ said in its June economic report. In May the BOJ left its overall economic assessment unchanged from April, saying the nation's economic adjustment was highly likely to continue. The central bank will continue to carefully monitor how potentially adverse developments in domestic and overseas financial markets impact the real economy by closely watching changes in corporate and consumer sentiment. The latest economic assessment released by the BOJ Monday was approved by BOJ board members at the Monetary Policy Meeting held on Friday.
Despite intense political pressure to conduct a further monetary easing, the BOJ decided to maintain its policy unchanged on Friday. Central bank policy board members voted unanimously to continue to trade the unsecured overnight call loan near zero percent and keep the current account at 5 trillion yen.
The BOJ's report said that the severity in corporate profits is increasing due to the sharp slowdown in exports and production. Corporate sentiment has also worsened. But the household income remained steady, the BOJ said. The BOJ also said it is highly likely that net exports will continue to fall.
The central bank also voiced concern over the outlook for capital spending, saying that it is highly likely that capital spending will fall.
The BOJ has not changed its assessment on prices, saying that import prices have risen through a combination of a weak yen and a rise in crude oil prices.
It also said that the BOJ needs to closely watch for a possible increase in downward pressure on prices. The BOJ said it will continue to monitor the impact from the its easy policy on the economy and financial markets. The central bank cited stock prices, the environment surrounding corporate profits and fundraising conditions at private companies as the factors it will closely watch.
The Japanese government last week downgraded its assessment of the economy for the fifth straight month in its June report, saying the "economy is deteriorating." The Cabinet Office warned that the world's second largest economy could be in "a recession phase." The minutes of the meeting will be released at 1400 JT on July 18. The policy board members are due to meet again June 28.

Revised economic components as follows:
-------------------------- June // May
Capital spending: starting to fall // leveling off
Personal spending: remained weak with some bright signs // remained weak with some bright signs
Net exports: continues falling // continues falling
Industrial output: falling sharply // falling sharply
Corporate profit: worsening // worsening
Income conditions: weakening // weakening