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OITA, Japan, March 23 (Reuters) - Bank of Japan board member Ryuzo Miyao said on Wednesday the central bank will take appropriate policy action if necessary but offered few clues on what specific action is in the works.
Miyao, the first BOJ policymaker to speak in public since the devastating earthquake and tsunami hit the country's northeast on March 11, repeated the line Governor Masaaki Shirakawa has been presenting in parliament, adding that he wanted to carefully examine future economic data to quantify the impact of the quake.
Miyao, a lifelong academic and expert on monetary policy, joined the board in March of last year. He is known for his research on inflation targeting and some analysts say he doubts the effectiveness of such a policy.
Following are key quotes from Miyao's speech to business leaders in Oita, southern Japan, and from a news conference that followed.
MONETARY POLICY
(from news conference)
"To assist the smooth reconstruction of quake-hit areas, the BOJ wants to consider what action it can take...
"The BOJ will carefully examine future moves in the economy and prices and take appropriate policy action if judged necessary.
"The BOJ's ample fund supply has been effective in containing financial institutions' worries. It will continue to supply ample funds based on demand."
QUAKE IMPACT
(from news conference)
"It is difficult at this stage to grasp the quantitative impact of the earthquake.
"The BOJ wants to carefully examine data due out in coming days with utmost attention, while taking into account the effects of the BOJ's additional easing last week and the government's possible future steps."
(from speech)
"We need to be mindful that the quake's negative impact on the economy at least on the supply side may be bigger than the Kobe quake 16 years ago, and be prolonged."
JGB UNDERWRITING
(from news conference)
"Central bank underwriting of government bonds is not allowed in many countries including emerging nations.
"This is because history has taught us that once a central bank starts underwriting government bonds, it eventually leads to reckless issuance of the currency and causes inflation, harming people's lives and the economy...
"If the BOJ were to directly underwrite government bonds, it would damage trust in the currency ... It is extremely important to maintain trust in the currency."
G7 INTERVENTION
(From news conference)
"The intervention had certain effects in smoothing a rapid rise in the yen." (Reporting by Rie Ishiguro; Editing by Edmund Klamann)