Enhancement of Monetary Policy Transparency
October 10, 2003
Bank of Japan
At the Monetary Policy Meeting (MPM) held today, the Bank of Japan decided, by unanimous vote, to take the following measures to enhance the transparency of monetary policy.
1. New Measures
With the aim of presenting the basic thinking on the conduct of monetary policy and the evaluation of the developments of the economy and prices in a more timely and lucid manner, the Bank decided to take the following measures.
(1) Interim assessment
Currently, the Policy Board reviews the standard scenario in the "Outlook and Risk Assessment of the Economy and Prices" (the Outlook Report) at the MPMs in April and October.
It will make the deliberations on the possible deviation from the standard scenario three months after these MPMs (July in the case of April, and January of the following year in the case of October), and report the outcome in "The Bank's View" of the "Monthly Report of Recent Economic and Financial Developments" (the Monthly Report).
(2) Same-day publication of the Monthly Report
Currently, the Bank publishes the Monthly Report one day after the MPM.It will publish "The Bank's View" of the Monthly Report on the same day of the MPM1.
"The Bank's View" will be made more lucid and concise.In addition, the Outlook Report will be published in two parts.The first part is the concise description of the Bank's basic judgment, and the second part deals with the detailed background information.
- See Attachment for the change in the dates of "Publication of Monthly Report."(3) Governor's press conference on the same day
Currently, the Governor calls a press conference once a month, two days after the MPM, or two days after the first MPM in the case of two MPMs held in the same month.
The Governor will call a press conference after every MPM on the same day.
2. More Detailed Description of the Commitment to Maintaining the Quantitative Easing Policy
With the aim of laying the foundation for sustainable growth of Japan's economy, the Bank is currently committed to maintaining the quantitative easing policy until the consumer price index (excluding fresh food, on a nationwide basis, hereafter the core CPI) registers stably a zero percent or an increase year on year.Such commitment is underpinned by the following two conditions.
First, it requires not only that the most recently published core CPI should register a zero percent or above, but also that such tendency should be confirmed over a few months.
Second, the Bank needs to be convinced that the prospective core CPI will not be expected to register below a zero percent.This point will be described in such materials as the analysis and the forecasts of Policy Board members in the Outlook Report.To be more specific, many Policy Board members need to make the forecasts that the core CPI will register above a zero percent during the forecasting period.
The above conditions are the necessary condition.There may be cases, however, that the Bank will judge it appropriate to continue with quantitative easing even if these two conditions are fulfilled.