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On Today's Monetary Policy Meeting

March 25, 2003
Bank of Japan

  1. Economic activity in Japan remains stagnant without clear signs of recovery in final domestic demand.At the same time, there exists substantial uncertainty about the economic outlook including prospects for overseas economies, stock market developments and progress in dealing with nonperforming loans.
  2. Military action against Iraq started against this background.The Bank of Japan is closely monitoring how the military action will affect the economy, especially through stock and foreign exchange markets, and stands ready to make every effort, including the additional provision of liquidity, to ensure financial market stability (see Attachment).For this purpose, for the time being, the Bank will apply the official discount rate to the Lombard-type lending facility on any business day, suspending the current restriction on the maximum number of days for such use.
  3. Given the prevailing severe economic and financial conditions including the effects of military action against Iraq, the Bank decided to further examine the basic framework for the conduct of monetary policy.
  4. As input to the process of discussing the basic framework, the Chairman instructed Bank staff to examine a wide range of issues related to the enhancement of monetary policy transparency and the strengthening of the monetary policy transmission mechanism based on the experience of quantitative easing so far and report back to the next MPM.
    With respect to specific measures, the Chairman particularly instructed Bank staff to explore possible measures to strengthen the transmission mechanism of monetary easing in the areas of corporate finance and money market operations and report back to the MPM as soon as possible.


March 25, 2003
Bank of Japan

At the Monetary Policy Meeting held today, the Bank of Japan decided, by unanimous vote, to set the following guideline for money market operations for the intermeeting period:

Until March 31, the Bank of Japan will conduct money market operations, aiming at the outstanding balance of current accounts held at the Bank at around 15 to 20 trillion yen.From April 1, considering necessary adjustment due to the establishment of the Japan Post, the Bank will conduct money market operations, aiming at the outstanding balance of current accounts held at the Bank at around 17 to 22 trillion yen.

For the time being, given that significant uncertainty including geopolitical risks is likely to persist, the Bank will provide more liquidity irrespective of the above target when necessary to secure financial market stability.


Meeting hours :
March 25th : 8:03-11:41

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)

From Ministry of Finance:
Takayoshi Taniguchi, Senior Vice Minister of Finance (8:03-11:14, 11:18-11:41)

From Cabinet Office:
Yuzo Kobayashi, Vice-Minister for Economic and Fiscal Policy (8:03-11:14, 11:18-11:41)

Release of minutes:
Tuesday, May 6