* BOJ seen keeping policy steady, decision expected
* BOJ to maintain view economy recovering moderately
* Board to debate possible change to export, output views
* Governor Kuroda to brief media at 0630 GMT
By Leika Kihara
TOKYO, Aug 8 The Bank of Japan is set to
continue its massive asset purchases and retain its rosy view on
the outlook on Friday despite a series of weak data,
underscoring its conviction that the world's third biggest
economy can withstand the pain from a tax hike without further
Some BOJ policymakers may propose offering a bleaker view on
exports and output than last month, given the recent gloomy data
that dashed hopes exports will pick up in time to offset a slump
in consumption after the sales tax hike in April.
But Governor Haruhiko Kuroda's resolutely upbeat forecasts
are expected to prevail, so changes in the BOJ's language, if
any, will be minor and unlikely to signal the chance of further
monetary loosening in the near-term, according to sources
familiar with the bank's thinking.
"A positive cycle of output, income and expenditure is
firmly in place, so we can say Japan's economy continues to
recover moderately as a trend," Kuroda said last week, sticking
to his optimistic view on the outlook.
At its two-day rate review that ends on Friday, the BOJ is
expected to maintain its policy framework, under which it has
pledged to increase base money by 60-70 trillion yen ($587-685
billion) per year through aggressive asset purchases to reflate
the moribund economy and drive inflation toward 2 percent
sometime next year.
Exports unexpectedly fell in June for a second straight
month and output plunged at the fastest pace since the March
2011 earthquake, casting doubt on the BOJ's view the economy
will fairly quickly ride out the pain from the April tax hike.
A private factory survey showed new export orders grew in
July for the first time in four months, although only modestly.
While the BOJ already expects Japan's economy to shrink in
the second quarter due to the tax hike effect, the contraction
may prove to be bigger - and the rebound more modest - than
projected given the delay in an export pick-up and weak
household spending, analysts say.
Some in the nine-member board, such as Koji Ishida, are more
cautious about the outlook than Kuroda. Ishida warned last month
that structural issues may further delay an export rebound.
The board is thus likely to debate whether to offer a
bleaker assessment than last month, when it said export growth
remains "flat" and output "continues to rise moderately as a
The BOJ policymakers are also seen scrutinising soft wage
data for June, which showed only a modest rise in bonuses and
regular pay despite Prime Minister Shinzo Abe's calls for
companies to raise base salaries so consumers can keep spending.
The closely-watched April-June gross domestic product data
will not be available until next week. Analysts polled by
Reuters expect the economy to have shrunk an annualised 7.1
percent in the second quarter, the first contraction in nearly
Some private-sector analysts say such a big contraction in
the second-quarter may mean economic growth in the current
business year will far undershoot the BOJ's current projection
of an 1.0 percent increase.
The weak GDP data, as well as sluggish wage growth, could
also heighten private economists' scepticism that the BOJ will
be able to meet its target of pushing inflation to 2 percent
sometime next year without further stimulus.
(1 US dollar = 102.1900 Japanese yen)
(Editing by Kim Coghill & Shri Navaratnam)