HIGHLIGHTS-Bank of Japan policy board March 6-7 minutes

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TOKYO, April 14 (Reuters) - The Bank of Japan policy board agreed that downside risks to the U.S. and global economy were heightening while financial market adjustments were being prolonged and were deepening, minutes of the central bank's March 6-7 policy review showed on Monday.

One board member said the central bank would need to examine whether Japan's favourable economic cycle would continue, given that caution was growing in domestic corporate activity.

At the meeting, the last chaired by former BOJ Governor Toshihiko Fukui before he retired, the board voted unanimously to keep the key rate target unchanged at 0.5 percent in the face of the fallout from the U.S. subprime mortgage mess.

The central bank also kept interest rates on hold at the following meeting on April 8-9, which was chaired by Masaaki Shirakawa who has become new governor of the central bank three weeks after Fukui retired last month.

Following are some key points from the minutes of the meeting:

MONETARY POLICY

-- The board members agreed that it was important to set monetary policy while assessing the outlook of the economy and prices and both upside and downside risk.

-- One member said the bank should closely examine the sustainability of the favourable of cycle of growth in production, income and spending, given that firms had recently become noticeably cautious.