UPDATE 1-BOJ keeps sanguine view of regional economy, stands ready to act

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* BOJ ups economic view for one Japan region, maintains for eight

* Regional economies recovering or expanding – BOJ

* Kuroda vows to ease “without hesitation” if price momentum lost (Recasts with regional report)

By Tetsushi Kajimoto

TOKYO, Oct 15 (Reuters) – The Bank of Japan on Tuesday raised its assessment for one of the country’s nine regions and stuck to its sanguine view on the rest, though frail factory production and exports suggested pressure for more stimulus is unlikely to ease anytime soon.

The central bank described all regional economies as either expanding or recovering.

“Domestic demand has continued on an uptrend, although exports, production and business sentiment have been affected by a slowdown in overseas economies,” the central bank said in a quarterly report analysing the economic conditions of the regional areas of Japan.

“A virtuous cycle from income to spending remains intact at both the corporate sector and households,” it added.

The central bank raised its economic view of Hokkaido, northern Japan, to say it has been “expanding moderately,” thanks to infrastructure spending on reconstruction from last year’s natural disasters. Previously, the bank said the region’s economy had been recovering moderately.

On the downside, reinforcing evidence that the bruising Sino-U.S. trade war and global slowdown were taking a toll on the export reliant Japan, the BOJ cut its view on factory output in the western Japanese region of Shikoku.

The central bank attributed the downgrade to slowing demand for production machinery and electronics parts and devices.

However, the central bank stuck to its views on private consumption on all the nine regions, describing them as either staying firm, picking up, recovering or increasing moderately.

It also noted some fluctuations caused by the Oct. 1 sales tax hike in some regions.

Firmness in private consumption, which accounts for well over half of economic output, could bolster the BOJ’s argument that solid domestic demand will offset the pain of weakening exports.

BOJ Governor Haruhiko Kuroda said on Tuesday the central bank would not hesitate to take additional easing steps if risks to the economy grow and threaten momentum towards its 2% inflation target.

“We need to pay closer attention to the possibility that momentum towards achieving our price target will be lost,” Kuroda said in a speech at a quarterly meeting of the central bank’s regional branch managers.

The BOJ will also monitor the economic impact of Saturday’s powerful typhoon and strive to maintain financial functioning and smooth settlement of funds, he added. (Reporting by Tetsushi Kajimoto; Editing by Chris Gallagher & Shri Navaratnam)

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