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On the Current Monetary Policy

July 17, 2000
Bank of Japan

  1. (1) At the Monetary Policy Meeting held today, the Bank of Japan decided to maintain its "zero interest rate policy".
  2. (2) The Policy Board views that Japan's economy is recovering gradually, with corporate profits and business fixed investment continuing to increase.The Policy Board also judges that the economy is likely to recover gradually led mainly by business fixed investment, unless there are major adverse external shocks.
  3. (3) With regard to the prices, the Policy Board views that the downward pressure on prices stemming from weak demand is declining significantly while an economic recovery is expected to continue moderately.
  4. (4) Given the above considerations, the majority of the Policy Board views that Japan's economy is coming to a stage where deflationary concerns are dispelled, which the Board have clearly stated as the condition for lifting the zero interest rate policy.
  5. (5) At the Meeting, however, some views were expressed that before reaching a final decision to lift the zero interest rate policy, it was desirable to ensure the judgment on the firmness of economic conditions including employment and household income.Besides, it was pointed out that the Board needed to see how the commencement of reconstruction proceedings of Sogo Co. could affect market developments and business sentiments.
  6. (6) Taking account of these factors, the Policy Board decided, by majority vote, on the maintenance of the zero interest rate policy.