* Some members saw risks tilted to downside at Oct 31 meeting
* Some fret about weak exports, others about inflation outlook
* Board members Sato, Kiuchi wanted more flexible CPI target
* Shirai called for more focus on downside risks
(Adds details, background) TOKYO, Nov 26 (Reuters) - Some Bank of Japan board members sought last month to water down the central bank's inflation target because of concerns about risks, such as slow rises in business investment and wages, that clouded the outlook, board minutes showed. At the Oct. 31 policy meeting, the BOJ said in a twice-yearly report that risks to the economic outlook were roughly balanced and Japan was making steady progress towards achieving its 2 percent inflation target in roughly two years. But minutes of the meeting showed a rift among the nine board members on the inflation target, with pessimists doubting whether firms would boost capital expenditure and regular pay quickly enough. The minutes were released by the BOJ on Tuesday. It was the biggest rift on the board since BOJ Governor Haruhiko Kuroda launched aggressive monetary stimulus in April to reach the inflation target. Two board members saw consumer inflation as having already peaked because the effect of a weaker yen, which inflates import costs, was seen tapering off. "One member said it could not yet be judged that Japan's economy was on track to achieve the BOJ's price target of 2 percent as expected," according to the minutes. Board members Takehiro Sato and Takahide Kiuchi repeated their dissent made in April against the two-year timeframe for achieving 2 percent inflation, on the view it was too ambitious for a country mired in deflation for nearly two decades. Sato proposed changing the inflation pledge to say such price levels were to be "foreseen." Kiuchi wanted to review the price target and the BOJ's stimulus after two years. Their proposals were both voted down by the board.
SOME SEE MORE RISKS Japan's economic growth slowed in July-September after outpacing other G7 economies in the first half of this year, although many analysts expect a pick-up in the current quarter as consumers try to beat a sales tax hike next April. The BOJ's baseline scenario is for Japan to overcome headwinds, such as soft exports and an expected slump in household spending after the tax hike, and see an economic recovery strong enough to accelerate inflation. But some board members -- including Sato and former IMF economist Sayuri Shirai -- saw risks to the economic and price outlook as tilted to the downside, the minutes showed, a sign not all are convinced about the rosy projections. Several members pointed to weak exports, particularly to emerging economies, and the risk that soft shipments overseas could dampen corporate capital spending, the minutes showed. The BOJ issues its long-term economic and price forecasts each April and October, and conducts a quarterly review of them in January and July. The report serves as a basis for debating the outlook for monetary policy.
(Editing by Chang-Ran Kim and John Mair)