HIGHLIGHTS 2-BOJ's Kuroda: economy, prices in line with April forecasts
TOKYO, July 11 (Reuters) - Bank of Japan Governor Haruhiko Kuroda said on Thursday the country's economy and prices were moving roughly in line with central bank projections made in April.
Speaking after a monthly policy review, Kuroda also said Japan's long-term interest rates were very stable, with the country's bond market volatility reduced, despite rises in U.S. and European yields.
While keeping monetary policy steady, the BOJ offered its most optimistic view of the economy in 2-1/2 years, saying a recovery had started as a weak yen and massive monetary stimulus spark activity and lift confidence.
Here are highlights of Kuroda's comments at a news conference after policy decisions were announced:
ECONOMY AND PRICES
"Overseas economies are somewhat weaker than expected while domestic demand is somewhat stronger than expected."
"Taken together, economic growth is moving in line with prior expectations."
"Most members of the BOJ board stuck to the view that there is high possibility that we can achieve a 2 percent increase in prices in the latter half of fiscal 2015."
"However, a few members maintained the cautious view on prices that they expressed when we issued our outlook report in April."
"Domestic demand is somewhat stronger, while overseas economies are somewhat weaker, compared to our view in April. The balance between domestic and overseas demand has shifted slightly but real GDP growth and prices are likely to develop in line with our projections."
"China is the world's No. 2 economy. Its growth rate is different from that of developed economies. Of course, we want to monitor what happens in China's economy.
"China can achieve stable economic growth due to its strong domestic demand. Still, we need to monitor developments in China, including this so-called shadow banking system.
"My understanding is that China is taking steps to achieve stable credit growth, and that they want to correct rapid credit growth by tightening regulations on shadow banking.
"China's economic growth is slower than it has been in the past, but it is still stable.
"China's government is focused more on the composition of economic growth and less on the speed of growth. It is making structural reforms, but there is still some uncertainty about the impact."
U.S. FEDERAL RESERVE
"In the United States, there is already debate about the Federal Reserve tapering off its monetary easing. Basically, the U.S. economy is recovering slowly but firmly. This is a positive for emerging markets and the global economy as a whole.
"The Fed has made clear that it wants to see more improvement in the labour market. Financial markets show people are nervous about tapering, but understanding of the Fed's policy is spreading."
JAPAN'S FISCAL POLICY
"The BOJ's view is that given the state of our public finances, fiscal discipline is essential.
"If concern about Japan's fiscal policy spreads, it is possible for interest rates to rise, so the BOJ hopes the government keeps this in mind.
"When you look at the joint statement that the BOJ and the government issued recently and the government's commitment to achieving a primary budget surplus, this shows the government taking fiscal discipline seriously."
"Long-term rates are very stable amid recent improving economic confidence and rising price expectations."
"Japan's (long-term) rates are stable while those in the United States and Europe are on the rise, given talk about the U.S. asset purchasing (scheme)."
"The BOJ's massive JGB buying each month ... has been very effective in lowering risk premiums. I think the impact will strengthen over time."
(Reporting by Stanley White and Kaori Kaneko; Editing by Simon Cameron-Moore and Clarence Fernandez)