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Statement on Monetary Policy

October 31, 2018
Bank of Japan

  1. At the Monetary Policy Meeting held today, the Policy Board of the Bank of Japan decided upon the following.
    1. (1) Yield curve control

      The Bank decided, by a 7-2 majority vote, to set the following guideline for market operations for the intermeeting period.[Note 1]

      The short-term policy interest rate:
      The Bank will apply a negative interest rate of minus 0.1 percent to the Policy-Rate Balances in current accounts held by financial institutions at the Bank.
      The long-term interest rate:
      The Bank will purchase Japanese government bonds (JGBs) so that 10-year JGB yields will remain at around zero percent. While doing so, the yields may move upward and downward to some extent mainly depending on developments in economic activity and prices.1 With regard to the amount of JGBs to be purchased, the Bank will conduct purchases in a flexible manner so that their amount outstanding will increase at an annual pace of about 80 trillion yen.
    2. (2) Guidelines for asset purchases

      With regard to asset purchases other than JGB purchases, the Bank decided, by a unanimous vote, to set the following guidelines.

      1. a) The Bank will purchase exchange-traded funds (ETFs) and Japan real estate investment trusts (J-REITs) so that their amounts outstanding will increase at annual paces of about 6 trillion yen and about 90 billion yen, respectively. With a view to lowering risk premia of asset prices in an appropriate manner, the Bank may increase or decrease the amount of purchases depending on market conditions.
      2. b) As for CP and corporate bonds, the Bank will maintain their amounts outstanding at about 2.2 trillion yen and about 3.2 trillion yen, respectively.
  2. The Bank will continue with "Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control," aiming to achieve the price stability target of 2 percent, as long as it is necessary for maintaining that target in a stable manner. It will continue expanding the monetary base until the year-on-year rate of increase in the observed consumer price index (CPI, all items less fresh food) exceeds 2 percent and stays above the target in a stable manner. As for policy rates, the Bank intends to maintain the current extremely low levels of short- and long-term interest rates for an extended period of time, taking into account uncertainties regarding economic activity and prices including the effects of the consumption tax hike scheduled to take place in October 2019. It will examine the risks considered most relevant to the conduct of monetary policy and make policy adjustments as appropriate, taking account of developments in economic activity and prices as well as financial conditions, with a view to maintaining the momentum toward achieving the price stability target. [Note 2]
  1. [Note 1] Voting for the action: Mr. H. Kuroda, Mr. M. Amamiya, Mr. M. Wakatabe, Mr. Y. Funo, Mr. M. Sakurai, Ms. T. Masai, and Mr. H. Suzuki. Voting against the action: Mr. Y. Harada and Mr. G. Kataoka. Mr. Y. Harada dissented, considering that allowing the long-term yields to move upward and downward to some extent was too ambiguous as the guideline for market operations decided by the Policy Board. Mr. G. Kataoka dissented, considering that, with heightening uncertainties regarding developments in economic activity and prices going forward, it was desirable to strengthen monetary easing so that yields on JGBs with maturities of 10 years and longer would broadly be lowered further. Return to text
  2. [Note 2] Mr. Y. Harada dissented, considering that, as for policy rates, it was appropriate to introduce forward guidance that would further clarify its relationship with the price stability target. In order to achieve the price stability target of 2 percent at the earliest possible time, Mr. G. Kataoka dissented, considering that further coordination of fiscal and monetary policy was important, and that it was necessary for the Bank to make a commitment to taking additional easing measures if it revised downward its assessment of medium- to long-term inflation expectations. Return to text
  1. In case of a rapid increase in the yields, the Bank will purchase JGBs promptly and appropriately. Return to text

(Reference)

Meeting hours:
Tuesday, October 30: 14:00-15:10
Wednesday, October 31: 9:00-12:01
Policy Board members present:
Haruhiko Kuroda (Governor)
Masayoshi Amamiya (Deputy Governor)
Masazumi Wakatabe (Deputy Governor)
Yutaka Harada
Yukitoshi Funo
Makoto Sakurai
Takako Masai
Hitoshi Suzuki
Goushi Kataoka

(Others present)

October 30
From the Ministry of Finance:
Eiji Chatani, Deputy Vice Minister for Policy Planning and Co-ordination (14:00-15:10)
From the Cabinet Office:
Akihiro Nakamura, Vice-Minister for Policy Coordination (14:00-15:10)
October 31
From the Ministry of Finance:
Kenichiro Ueno, State Minister of Finance (9:00-11:38, 11:46-12:01)
From the Cabinet Office:
Ryosei Tanaka, State Minister of Cabinet Office (9:00-11:38, 11:46-12:01)
Release Dates and Time:
Statement on Monetary Policy -- Wednesday, October 31 at 12:08
Outlook for Economic Activity and Prices (The Bank's View) -- Wednesday, October 31 at 12:08
Release Schedule:
Outlook for Economic Activity and Prices (Outlook Report, full text including The Background) -- Thursday, November 1 at 14:00
Summary of Opinions -- Thursday, November 8 at 8:50
Minutes -- Wednesday, December 26 at 8:50