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Announcement of the Monetary Policy Meeting Decisions (Sep. 9)

September 9, 1998
Bank of Japan

(For immediate release)

Change of the Guideline for Money Market Operations

  1. (1) The Bank of Japan today held a Monetary Policy Meeting, a regular meeting of the Policy Board on monetary policy.By majority vote, the Policy Board determined to further ease the stance of money market operations for the inter-meeting period ahead as follows:
    The Bank of Japan will encourage the uncollateralized overnight call rate to move on average around 0.25%.
    Regardless of the above guideline for the call rate, the Bank of Japan will provide more ample funds, if judged necessary, to maintain the stability of the financial markets.
  2. (2) The overall economic condition of Japan has been deteriorating, and prices on a downward trend.Private bank lending has been declining, and the growth of money supply rather moderate.The money and capital markets have shown unstable developments, such as those seen in the risk premium on interest rates and stock prices.
    The pace of further deterioration of the economy is expected to gradually slow down by the implementation of the government's fiscal policy measures including the comprehensive economic package.However, the level of economic activity has already declined considerably.In addition, there is a risk that recent developments in the financial markets and the increase in bankruptcy might further weaken the confidence of corporate and household sectors.Bearing these in mind, we cannot entirely preclude the possibility that economic and price conditions will worsen more.
  3. (3) The monetary policy objective of the Bank of Japan is to pursue price stability, avoiding both inflation and deflation.Taking into account the present economic and financial conditions, the Bank of Japan decided that the above-mentioned monetary easing measures be appropriate in order to prevent the economy from falling into a deflationary spiral and to ensure the slowdown of economic deterioration.
  4. (4) The Bank of Japan, through continued injection of ample funds under the above-mentioned policy guideline, will make every effort to keep the stability of the financial markets, thereby accommodating the expansion of money supply.
  5. (5) At present, recovery of business conditions and revitalization of the financial system are the imminent issues in the Japanese economy.The Bank of Japan strongly hopes that the decision to make money market operations more accommodative will facilitate the resolution of these issues and that all parties concerned will make their utmost efforts in surmounting the economic difficulties they face.


Meeting hours :
9:01 a.m. to 0:33 p.m, and 2:35 p.m to 5:41 p.m

Members present :
Masaru Hayami ( Chairman, Governor )
Sakuya Fujiwara ( Deputy Governor )
Yutaka Yamaguchi ( Deputy Governor )
Yasuo Gotoh
Susumu Taketomi
Toshio Miki
Nobuyuki Nakahara
Eiko Shinotsuka
Kazuo Ueda

(Others present)

From Ministry of Finance :
Sadakazu Tanigaki, State Secretary for Finance ( 9:01 to 10:09 a.m. )

From Economic Planning Agency :
Hiroshi Imai, Parliamentary Vice Minister ( from 9:01 a.m. )

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"
9:20 a.m. on Friday, September 11, 1998
English version of "The Background"
End of September 1998

Release of minutes :
2:00 p.m. on Friday, October 16, 1998