* Ishida warns of uncertainty over weak yen effect on
* Wage growth holds key to consumption outlook-Ishida
* Core CPI only among various factors BOJ looks at-Ishida
* Adds firms being able to translate costs to consumers
(Adds quotes from news conference)
By Leika Kihara
SHIMONOSEKI, Japan, July 29 Bank of Japan board
member Koji Ishida warned on Tuesday that domestic structural
factors may further delay a much hoped-for rebound in export
performance - even as global growth picks up.
He also made the case for a more flexible view of the BOJ's
2 percent price goal - one that is not rigidly pegged to the
core consumer price index - suggesting the central bank won't
automatically expand stimulus simply because the index fails to
hit the target within a given timeframe.
"Exports continue to move sideways and lack momentum" as
demand in emerging Asian markets remained weak, Ishida said in a
speech to business leaders in Shimonoseki, western Japan, on
While sticking to the BOJ's official view that improvements
in the global economy would support exports ahead, Ishida warned
that overseas shipments may not grow much because many Japanese
companies had shifted factories abroad.
"It's also uncertain how much the (yen's) decline will lead
to an expansion in export volume," he noted.
Exports have failed to pick up despite the boost from a weak
yen, which gives Japanese goods a competitive advantage overseas
- to the disappointment of many BOJ policymakers.
The BOJ has argued that domestic demand is now strong enough
to keep the economy on a recovery track. But Ishida's comments
underscore a growing concern among central bankers that any
rebound in exports will be slow and moderate, keeping the
economic recovery fragile.
NOT JUST CORE CPI
The BOJ has stood pat since launching a major monetary
stimulus campaign in April last year, when it pledged to double
base money via aggressive asset purchases to accelerate consumer
inflation to 2 percent in roughly two years.
Core consumer inflation has risen steadily, although it
slowed to 1.3 percent in the year to June from 1.4 percent in
May, as energy costs moderated from last year's sharp increases.
The BOJ expects consumer inflation to slow in coming months
as the boost from a weak yen fades, before accelerating again
toward its 2 percent inflation target late this year.
But many analysts doubt whether price rises will accelerate
from here, with some predicting the central bank may be forced
to ease again if core consumer inflation fails to hit 2 percent
early next year.
In an attempt to dispel such speculation, Ishida said the
core consumer inflation figures were among a variety of
indicators the central bank would examine in judging whether its
price target has been met.
"We have to scrutinise various elements of the economy," he
said. "Economic data fluctuates every month, so it's hard to set
a single standard in judging whether our target is met in a
stable manner. It's really a judgement call."
Ishida offered an upbeat take on prices, saying that
improvements in the economy are allowing more firms to pass on
rising costs to consumers.
"Companies are gradually turning bolder in passing on the
costs," Ishida told a news conference. "Wholesale costs continue
to rise so if things stay as they are, companies' pricing
activity will continue to change. But for this to happen, the
economy must remain in good shape."
(Reporting by Leika Kihara; Editing by Chris Gallagher and Eric