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Change in the Guideline for Money Market Operations

May 20, 2003
Bank of Japan

(For immediate release)

  1. At the Monetary Policy Meeting held today, the Bank of Japan decided to change the main operating target in the guideline for money market operations. The target balance of current accounts held at the Bank is raised from 'around 22 to 27 trillion yen' to 'around 27 to 30 trillion yen' (see attachment).
  2. Economic activity in Japan remains flat but uncertainties about future prospects have recently been increasing. In addition to uncertainties arising from the prospect of a recovery in the US and European economies as well as the impact of SARS on East Asian economies, unstable stock and foreign exchange markets overshadow future prospects.
  3. Against this background, a meeting of the Financial System Management Council was held and it was decided that injection of capital into Resona Bank was necessary. With additional liquidity provision by the Bank of Japan, overall conditions in financial markets have remained calm so far. Given the significant uncertainties over economic prospects, however, careful attention is warranted because economic activity could be adversely affected if financial markets become more unstable.
  4. Based on the above assessment of the economic and financial situations, the Bank thought it appropriate to raise the target balance of current accounts held at the Bank in order to show its determination to ensure financial market stability.

Attachment

May 20, 2003
Bank of Japan

At the Monetary Policy Meeting held today, the Bank of Japan decided, by majority vote, to set the following guideline for money market operations for the intermeeting period: The Bank of Japan will conduct money market operations, aiming at the outstanding balance of current accounts held at the Bank at around 27 to 30 trillion yen.

Should there be a risk of financial market instability, such as a surge in liquidity demand, the Bank will provide more liquidity irrespective of the above target.

(Reference)

Meeting hours :
May 19th : 14:00-15:42
May 20th : 9:00-12:57

Members present :
Toshihiko Fukui ( Governor )
Toshiro Muto ( Deputy Governor )
Kazumasa Iwata ( Deputy Governor )
Kazuo Ueda
Teizo Taya
Miyako Suda
Shin Nakahara
Hidehiko Haru
Toshikatsu Fukuma

(Others present)

May 19th:
From Ministry of Finance:
Hiroki Tsuda, Deputy Vice Minister for Policy Planning and Co-ordination (14:00-15:42)

From Cabinet Office:
Yuzo Kobayashi, Vice-Minister for Economic and Fiscal Policy (14:00-15:42)

May 20th:
From Ministry of Finance:
Takayoshi Taniguchi, Senior Vice Minister of Finance (9:00-12:21,12:26-12:57)

From Cabinet Office:
Yuzo Kobayashi, Vice-Minister for Economic and Fiscal Policy (9:00-12:21,12:26-12:57)

Release of Monthly Report of Recent Economic and Financial Developments:
( Consisting of "The Bank's View" and "The Background" )

Japanese version of the entire report and English version of "The Bank's View"
2:00 p.m. on Wednesday, May 21
English version of "The Background"
Within a few business days from the release of "The Bank's View"

Release of minutes :
2:00 p.m. on Monday, June 30