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Bank of Japan preview from BNP (and USD/JPY target)

Haruhiko Kuroda

After a policy meeting, the Bank of Japan said it now expected prices to move "toward" 2.0 percent by March 2019, the latest in a series of delays. The Bank of Japan also made the decision to leave its target for commercial bank deposit interest rates at -0.1%.

(Repeats to additional subscribers without any changes to text) * 10-year notes have worst monthly performance since February 2015 * Fed, Bank of Japan, Bank of England meetings in focus * Friday's jobs report watched for rate hike indications By Karen Brettell NEW YORK, Oct 31 (Reuters) - Benchmark U.S. Treasuries ended their worst month in nearly two years on a firm note on Monday, after falling expectations of central bank accommodation sent sovereign debt yields higher globally this month and made U.S. bonds less attractive to foreigners. Medium-to-long-term expectations on growth were sensitive to efforts by the government to tacking Japan's aging population and undertake institutional reforms, it said.

In forex trading yesterday the U.S. dollar was at ¥104.77, slightly off ¥104.82 in NY on Monday. Prices as measured by the BOJ's primary inflation gauge have fallen for seven consecutive months.

"For the economy to achieve sustainable, appropriate growth, we need fiscal and structural policies as well as monetary policy", Kuroda told a news conference.

The Bank of Japan revised down its inflation forecasts, but declined to expand stimulus.

The bank also cut back its consumer price forecast for the current fiscal year, which ends in March, and for the subsequent two years.

The BOJ will conduct purchases of Japanese government bonds with an aim to keep the annual pace of increase in outstanding holdings at about JPY 80 trillion (USD 760 billion), the statement said.

Likewise, Michael Moen, investment manager at Aberdeen Asset Management, said the BoJ's moves suggest their level of concern is rising, due to the renewed focus on downside risk.

BoJ, meanwhile, maintained policy balance rate -0.10 per cent.

At the last meeting, the BOJ chose to shift its policy target to the yield curve instead of quantitative easing, aiming to prepare for a long-term battle to realize 2 percent inflation.

The central bank is likely to hold any future rate cuts or other forms of quantitative easing unless it sees a serious threat to the economic recovery.

Japan's economy expanded for the second straight quarter in April-June but many analysts expect growth to remain modest for the rest of this year, with exports and output weak on sluggish global demand.

Slow wage growth has also hurt consumption, further undermining the chance of a strong near-term revival in the economy.