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Minutes of the Monetary Policy Meeting

on April 9, 1998
(English translation prepared by the Bank staff based on the Japanese original)

May 22, 1998
Bank of Japan

A Monetary Policy Meeting of the Bank of Japan Policy Board was held in the Head Office of the Bank of Japan in Tokyo on Thursday, April 9, 1998, from 9:02 a.m. to 11:49 a.m., and from 12:30 p.m. to 4:10 p.m. 1

Policy Board Members Present
Mr. M. Hayami, Chairman, Governor of the Bank of Japan
Mr. S. Fujiwara, Deputy Governor of the Bank of Japan
Mr. Y. Yamaguchi, Deputy Governor of the Bank of Japan
Mr. Y. Gotoh
Mr. S. Taketomi
Mr. T. Miki
Mr. N. Nakahara
Ms. E. Shinotsuka
Mr. K. Ueda

Government Representatives Present
Mr. H. Matsunaga, Minister of Finance 2
Mr. K. Omi, Director General of the Economic Planning Agency 3

Reporting Staff
Mr. J. Yonezawa, Executive Director
Mr. I. Yamashita, Director, Financial Markets Department
Mr. M. Sugita, Director, International Department
Mr. M. Matsushima, Director, Research and Statistics Department
Mr. N. Inaba, Advisor, Policy Planning Office
Mr. K. Yamamoto, Chief Manager, Planning Division I of the Policy Planning Office

Secretariat of the Monetary Policy Meeting
Mr. T. Mitani, Director, Secretariat of the Policy Board
Mr. S. Watanabe, Secretariat of the Policy Board
Mr. K. Momma, Manager, Policy Planning Office

  1. The minutes of this meeting were approved by the Policy Board at the Monetary Policy Meeting held on May 19, 1998. Those present are referred to by their titles at the time of the meeting.
  2. Mr. Matsunaga was replaced by Mr. Z. Mizoguchi, Deputy Vice Minister for Policy Co-ordination of the Ministry of Finance from 9:54 a.m.
  3. Mr. Omi was replaced by Mr. T. Shioya, Director General of the Coordination Bureau of the Economic Planning Agency from 12:30 p.m.

I.Statements by the Minister of Finance and the Director General of the Economic Planning Agency

Before proceeding with the meeting, the Minister of Finance, representing the government, made the following remarks:

  1. (1) As stated in the new Bank of Japan Law, which came into effect on April 1, 1998, it was important for the Bank's monetary policy and the basic stance of the government's economic policy to be mutually harmonious. In this regard, the Monetary Policy Meeting would be a useful opportunity for the Bank of Japan and the government to exchange views.
  2. (2) The Japanese economy remained stagnant, faced with increasingly severe conditions. The government had therefore implemented a supplementary budget for fiscal 1997 and a 2-trillion yen special income tax reduction. Furthermore, the government was discussing the implementation of drastic measures as necessary, attaching importance to the outline of the comprehensive economic stimulus package drawn up by the ruling coalition parties in late March.
  3. (3) The government was taking various measures to address the financial system problem and the cautious lending attitude of financial institutions. It was important that the Bank of Japan, for its part, should reduce financial institutions' anxiety about financing difficulties by supplying ample funds to the money market.

Next, the Director General of the Economic Planning Agency, also representing the government, made the following remarks:

  1. (1) The economy remained stagnant, with conditions further increasing in severity. In addition to the emergency package of economic policies to conduct reforms in preparation for the 21st century, adopted in November 1997, the 2-trillion yen special income tax reduction, and the supplementary budget for fiscal 1997, the government was working to implement expeditious and effective financial system stabilization measures.
  2. (2) The government would reduce corporate taxes in the fiscal 1998 tax reform, and, attaching importance to the outline of the comprehensive economic stimulus package put forward by the ruling coalition parties, would also consider taking further drastic measures as needed.
  3. (3) As stipulated by the new Bank of Japan Law, it was very important for monetary policy to be in mutual harmony with the basic stance of the government's economic policy. The government intended to ensure proper economic policy management through adequate exchange of views with the Bank.

II. Summary of Staff Reports4

A. Money Market Operations in the Intermeeting Period

Market operations in the period since the previous meeting on March 26, 1998 were conducted in accordance with the guideline determined at the meeting, which was to encourage the uncollateralized overnight call rate to remain on average slightly below the official discount rate. Until March 31, the Bank supplied ample liquidity to the market as there was a strong concern among market participants about liquidity shortages arising near the fiscal year-end. As a result, the uncollateralized overnight call rate ended the fiscal year at around the previous year's level. In April, the uncollateralized overnight call rate dropped temporarily to the 0.3-0.4 percent range due to a seasonal surplus of funds. The Bank therefore withdrew an appropriate amount of funds according to the guideline for money market operations, paying careful attention to the developments in interest rates on term instruments. As a result of these operations, the uncollateralized overnight call rate in the current monthly reserve maintenance period (from March 16 to April 15) averaged slightly above 0.42 percent up to April 8.

Interest rates on term instruments declined significantly from late February owing to the Bank's ample provision of funds, and very recently fluctuated in the 0.7-0.8 percent range. On April 3, stock prices dropped and rates on term instruments came under upward pressure against the background of an overseas credit rating agency's revision of its outlook for both Japan's country ceilings and the domestic currency rating for the government to negative from stable. However, stock prices recovered steadily thereafter and rates remained stable. Although the seasonal tightening of money market conditions at the fiscal year-end and the effects of the downgrading of the outlook for the Japanese sovereign rating had been dealt with, it was considered that developments in interest rates on term instruments continued to require careful monitoring.

B. Recent Developments in Foreign Exchange Markets and Overseas Economic and Financial Conditions

1. Developments in foreign exchange markets

In the period since the previous meeting, the yen had depreciated against the U.S. dollar, at one point falling to 135 yen, reflecting releases of weak economic indicators such as the Bank'sTankan (Short-term Economic Survey of Enterprises in Japan) and an overseas credit rating agency's downgrading of the outlook for the Japanese sovereign rating. Subsequently, the yen recovered to around 131 yen, due to anticipation of an economic stimulus package and heightened expectation of foreign exchange intervention. The nominal effective exchange rate of the yen fluctuated similarly to developments in the yen's value against the U.S. dollar. Option prices indicated that the expected volatility of the yen against the U.S. dollar was greater than that of the deutsche mark against the U.S. dollar. This seemed to reflect the uncertainty prevailing in the markets regarding the details of the economic stimulus package and execution of foreign exchange intervention.

During the same period, East Asian currencies weakened against the U.S. dollar.

2. Overseas economic and financial developments

In the United States, economic activity continued to expand firmly, at a pace exceeding the potential growth rate. Although growth in net exports slowed somewhat, household spending in particular increased steadily. The number of employees on non-farm payrolls declined slightly in March, but this seemed attributable to extraordinary factors such as weather. Tightness in labor markets continued, judging from the continuing low unemployment rate and the rapid growth in labor compensation per hour. In the financial markets, long-term interest rates declined somewhat due partly to the reduced number in employees on non-farm payrolls in March. Stock prices passed the US$9,000 mark following the news of mergers of large financial institutions, but were later adjusted reflecting a weakening of the outlook for corporate profits.

Turning to Europe, recovery in production and employment in Germany continued to be very moderate. In the United Kingdom, economic growth remained firm.

In East Asia, no signs of economic recovery led by exports were seen despite a depreciation of currencies. In Korea and Thailand, stock prices weakened. In China, production growth decelerated, a development considered to require due attention.

C. Economic and Financial Developments in Japan

1. Economic Developments

With respect to final demand, growth in net exports, which had been underpinning the economy, slowed and business fixed investment seemed to have started to decline. Private consumption and housing investment continued to be weak, and public-sector investment was on a decreasing trend. Industrial production continued to decline against the background of a significant accumulation of inventories reflecting the weak final demand. Consequently, negative impacts on corporate profits as well as on employment and income conditions intensified and business sentiment rapidly weakened, leading to a further deterioration of domestic demand. Thus, developments in production, income, and expenditure were starting to operate in a vicious circle and there was strong downward pressure on overall economic activity.

As regards the outlook for the economy, growth in net exports was unlikely to be strong enough to prevent deterioration of the economy, partly reflecting further adjustments in other Asian economies. Business fixed investment was likely to enter an adjustment phase due mainly to a decline in corporate profits. With regard to private consumption, no clear recovery could be expected against the background of the weakening of income formation. Downward pressures on economic activities, particularly on production, were likely to continue to be strong for the time being, because the level of inventories was high and a conspicuous recovery in domestic private demand was unlikely. However, following the implementation of measures to stabilize the financial system and the special tax-cut measures, additional economic stimulus measures were being discussed based on the outline of the package exceeding 16 trillion proposed by the ruling coalition parties. The details of the measures and their effects on corporate and household confidence would hold great significance.

2. Prices

Wholesale prices continued to decline, and the year-to-year increase in consumer prices (excluding the effects of institutional changes such as the rise in the consumption tax rate) declined to close to zero. As for the future, prices overall were likely to soften reflecting a continued widening of the output gap in the domestic economy and the decline to date in overseas commodity prices. The negative effects of these price developments on business activity would also need to be monitored carefully.

As for land prices, there were indications that both commercial land prices and residential land prices had been softening again since autumn 1997.

3. Financial developments

In the money markets, interest rates on term instruments declined substantially from mid-February through mid-March and generally remained steady thereafter. This reflected the Bank of Japan's ample provision of funds through contracts that matured after the fiscal year-end as well as progress in implementing the financial system stabilization measures. It was to be noted, however, that the rates were still high compared with those prevailing before autumn 1997, which could be attributed to the continuing cautious attitudes of market participants toward credit risk. Meanwhile, with releases of weak economic indicators, long-term government bond yields fluctuated in a historically low range and stock prices declined from the end of March.

With respect to monetary aggregates, the growth in money stock continued to be rather high in February partly due to the shift of funds away from investment trusts. Meanwhile, private bank lending remained sluggish, but with an increase in corporate financing via the capital market, a substantial fall in overall corporate fund-raising seemed to have been avoided. Banks, however, remained cautious in extending loans with a view to improving their medium-term profitability and financial soundness. In addition, fund-raising costs of firms remained high reflecting their low credit standing. Some firms, particularly small and medium-sized firms, therefore faced difficult financing conditions and it was considered that the effect of this on the economy continued to warrant careful monitoring.

  1. 4Reports were made based on information available at the time of the meeting.

III. Approval of the Minutes of the Monetary Policy Meeting held on March 13, 1998

At the beginning of the afternoon session of the meeting, the Policy Board approved unanimously the minutes of the Monetary Policy Meeting held on March 13, 1998 for release on April 14.

IV. Summary of Discussions by the Policy Board on Economic and Financial Developments

Members first discussed the current economic condition based on economic indicators released from the end of March through the beginning of April, including Tankan. The following comments were made.

  • In addition to the weakening of household spending, there were distinct signs of a decline in business fixed investment. Inventory adjustment had extended beyond the processing industries to the construction materials and producer goods sectors. With the present level of inventory, the adjustment would take at least until this coming autumn, in the worst case until the end of the year, although this would depend on the outcome of the government's economic stimulus package.
  • The economic recovery, the strength of which many people were not able to appreciate, ended in the April-June quarter of 1997, followed by a downturn involving a possible medium-term adjustment of business fixed investment. According to an estimation, the deflationary pressure in fiscal 1997, including that from the fiscal consolidation, was approximately 15 trillion yen, and this intensified the downward momentum of the medium-term adjustment. Under these circumstances, the unemployment rate had been rising gradually since the 1970s. Since Japanese firms were at an important turning point of abandoning the Japanese management system, which focused on maintaining employment by increasing debts, and adopting a new management objective of improving the rate of return on equity, it would be necessary to pay due attention to developments in employment conditions.
  • The stagnant economy in fiscal 1997 was attributable to (1) deflationary pressure from fiscal consolidation; (2) adjustments in other Asian economies; and (3) greater anxiety about the domestic financial system since autumn 1997; as well as (4) a fall in information technology-related investment, which had boomed in fiscal 1994 through fiscal 1996.
  • The decline in household spending from the first half of 1997 placed substantial adjustment pressures on manufacturing industry. As a result, domestic automobile sales for fiscal 1997, for example, dropped to a 10-year low. This contraction of demand spread from consumer goods to less processed goods, putting almost all raw and processed materials industries in the severest condition since the 1970s.
  • The Japanese economy in the past few years had featured business cycles influenced by structural adjustment pressures, which constrained economic expansion and intensified economic adjustment. The current adjustment phase since summer 1997 at first seemed to be a regular cyclical adjustment triggered by a shift of income distribution from the household sector to the government. However, with confidence weakened by ongoing structural adjustment, the economic downturn accelerated.
  • The recovery in corporate profits until 1997 was supported by three factors: export growth reflecting the depreciation of the yen, low interest rates, and corporate restructuring. Of these three factors, the first two could not be expected to have additional stimulative effects. Therefore, it was possible that the weakening of the demand outlook was now more directly leading to a further intensification of corporate restructuring, thereby easily causing an economic contraction.

As seen above, members made various comments from different points of view. Members, however, shared the view that sluggish final demand, particularly household spending, was leading to prolonged inventory adjustment and declines in production and corporate profits, and this, together with the persistent structural adjustment pressure, continued to place strong downward pressure on overall economic activity.

The members then discussed the outlook for the economy focusing on (1) the implications of the weakened cycle of production, income, and expenditure, and (2) the effect of a possible large-scale economic stimulus package involving fiscal expenditure. 5 Comments made included the following.

  • In the immediate future, developments in inventory adjustment and consumer sentiment would be the key to overall economic developments. From both viewpoints, unless measures to stimulate demand were taken promptly, the Japanese economy would likely enter a recession.
  • Econometric analysis showed that from the 1970s through the first half of the 1980s, employment adjustments were made gradually over a period of about four years. Recently, however, the length of each adjustment phase shortened to two to three years. This implied that employment conditions were likely to worsen considerably this year if no government measures were taken.
  • Although it was difficult to predict how serious the adjustment pressure would become, it was certain that an increase in the number of debt-ridden firms and bankruptcies or a full-scale employment adjustment would add to the adjustment pressure. It was therefore necessary to take prompt action to avoid such a situation, and it was hoped that the economic stimulus package being discussed by the government would be strong enough to dispel such concerns.
  • The private-sector economy was showing a cyclical economic downturn, judging from developments in business fixed investment and inventory investment. Therefore, overall economic activity would remain sluggish at least in the first half of fiscal 1998, even if the negative effects of fiscal consolidation in fiscal 1997 were neutralized. The momentum of the economic downturn would likely be contained in the latter half of fiscal 1998, but this depended chiefly on the government's economic stimulus measures, and downside risk factors such as the financial system issues and deflation should not be overlooked.
  • It was likely that the impact of adjustment in other Asian economies would persist for a while. However, if additional economic stimulus measures were taken, the contribution to GDP growth of the government sector, which was substantially negative in fiscal 1997, would become neutral or even somewhat positive in fiscal 1998. Regarding the financial system, if the 30 trillion yen of public funds introduced in February was utilized effectively, confidence could be expected to improve to some degree. Further, as suggested in some media reports, if an economic stimulus package with new fiscal spending (the so-called"pure water" portion) worth about 10 trillion yen, including 4 trillion yen of special income tax cut, was implemented, a real growth rate of around 1.5 percent would be possible in fiscal 1998, even if allowance was made for a decline in private-sector business fixed investment and a weakening of exports.
  • The cyclical momentum of production, income, and expenditure was very weak judging from the current level of inventory adjustment pressure and the lack of confidence in both the household and corporate sectors. Therefore, it would be difficult for the economy to resume recovery without a boost from economic stimulus measures. In order to promote a recovery in household and corporate confidence, strengthening the supply side of the economy would be one of the important tasks.

In the Board's discussion of price developments, most of the members shared the view that prices were likely to remain weak in the immediate future reflecting a continued widening of the domestic output gap, although the risk of any significant declines was small.

The members also discussed the risk of the economy falling into a deflationary spiral given the above-mentioned economic and price situation. Many members were of the view that the recent declines in prices largely reflected falls in international commodity prices such as crude oil prices. Therefore, there was no imminent risk of a deflationary spiral occurring, resulting in a further decline in corporate profits or a serious impact of higher real interest rates. Also, a member pointed out that there was little risk of a critical deflationary spiral in the immediate future in view of the latest Tankan survey results, which indicated that while corporate profits were forecast to decrease in fiscal 1998, the current profits-to-sales ratio of principal manufacturing firms was projected at around 4.0 percent, which was about the average for the past.

However, the same member added that the strengthening downward pressure on the economy injected uncertainty into this outlook for corporate profits. Another member commented that the market conditions and price developments of the raw and processed materials industries indicated that the economy was on the verge of a deflationary spiral. A different member pointed out that even the rate of increase in consumer prices, the prices of goods and services at the final stage of demand, had been close to zero percent. Therefore, if further downward pressure were exerted on prices, it would be difficult to contain the pressure in the short term.

The above discussion suggested that the members had slightly different views of the outlook for economic and price developments depending on how they anticipated the effects of the government's economic stimulus package, the details of which were as yet undecided. However, the members shared the view that the extent of economic adjustment would intensify unless measures were taken to contain the downward pressure on the private sector. Also, the majority of the members, including those who remarked that there was no impending risk of a deflationary spiral, agreed that they should be aware of the possibility that such a risk might increase in the future.

Consequently, all of the members agreed that the most critical issue at the time was how much boost the government's economic stimulus package, to be announced soon, would give to household and corporate confidence, and that they needed to examine closely the details of the economic package and the permeation of its effects throughout the economy.

Regarding the cautious lending attitude of financial institutions, the members agreed with the view that a rapid collection of loans through cancellation of contracts toward the fiscal year-end in March, which had been a matter of concern, had been averted owing in part to various government measures including the injection of public funds. However, the lending attitude of financial institutions remained cautious in April. Therefore, all of the members also agreed that they needed to continue to observe the effect of this attitude on corporate financing, especially on the financing conditions of small and medium-sized firms. In relation to this issue, a member pointed out that although the turmoil in the Japanese financial system had subsided, the system was not functioning so as to stimulate economic activity, and continued to be vulnerable to possible shocks.

  1. 5At the time of this meeting, the content of the economic stimulus package had not yet been revealed, and conjectural media reports prevailed. At 5:00 p.m., after the meeting had ended, Prime Minister Hashimoto held a press conference to announce the skeleton of an economic stimulus package worth 16 trillion yen including a 4-trillion yen special income tax-cut.

V. Summary of Discussions on Monetary Policy for the Immediate Future

Following the Board's discussion of current economic and financial developments, the members discussed the basic thought behind monetary policy for the immediate future. A member pointed out that the present level of interest rates was especially low from the viewpoint of households and pensioner households, therefore, faced unstable income conditions, which were issues to take into consideration in deliberating monetary policy. However, members including the above member considered that because households earned income either by running a business or working for a firm, monetary policy should ultimately be directed at strengthening the economic activity mainly through the corporate sector. Accordingly, all of the members took the view that from the central bank's macroeconomic standpoint, it would be an extremely difficult choice to raise interest rates under the current economic condition.

By contrast, many members agreed that a further lowering of interest rates could be consistent with the strong downward pressure on overall economic activity and the increase in real interest rates due to weak developments of prices. However, following the comments below, all of the members indicated their hesitance to decide an additional lowering of interest rates at this meeting.

  • Although a lowering of interest rates was a possible option, it required careful consideration with the interest rates already at a historically low level. The conditions for lowering interest rates were (1) anxiety of a strong negative impact of rises in real interest rates resulting from further falls in prices; and (2) an environment in which the effects of the lower interest rates would permeate effectively. If interest rates were actually reduced, they would mark a new record low. Therefore, once interest rates were lowered, it would be necessary to consider raising them again at the earliest possible timing.
  • A straightforward policy solution under the current economic and financial conditions would be a lowering of interest rates. However, considering the fact that the government was discussing the implementation of economic stimulus measures, it was not prudent to run the risk of taking a policy action whose effects, and the response it would produce in the household sector, were uncertain.
  • The next interest rate reduction could be the last possible monetary easing measure. The move, therefore, was to be made only in the case of an emergency, and should be decided with due caution.
  • There was little room for further decreases in interest rates and the effect of an official discount rate cut might be limited only to the announcement effect. Consequently, the timing and other details of the policy action should be thoroughly planned so as to have the maximum announcement effect--for example, connecting it with the government's economic stimulus measures.
  • Careful consideration should be given to the impact of lower interest rates on the yen's foreign exchange rate.

A member also commented that at present, the availability of monetary policy measures to place the Japanese economy on a strong recovery path was limited, and that it was important to implement structural reform to strengthen the supply side of the economy, such as establishing an environment to promote technological innovations.

In considering the guideline for market operations in the intermeeting period ahead, the members deliberated on financial market developments.

Interest rates on term instruments declined markedly from mid-February, and thus the members agreed that the effect of the increase until mid-February on the real economy would not be as significant as was previously anticipated.

However, the rates remained approximately 0.2 percent higher than the level before autumn 1997, even after the fiscal year-end on March 31. Therefore, the members shared the view that market participants' concern about credit risk persisted. There was also the observation that the signs of an upturn in interest rates on term instruments and the Japan premium, following an international credit rating agency's downgrading of the outlook for the Japanese sovereign rating reported on April 3, indicated that the money market continued to be sensitive to credit risk information. Based on such understanding, all of the members agreed that they should continue to observe developments in interest rates of term instruments carefully in conducting market operations.

In connection with the persistent market concern over credit risk, the members discussed issues regarding the financial system and financial structure in the context of monetary policy management. The following views were contributed as points for discussion.

  • Recent developments in interest rates on term instruments and yields on corporate bonds suggested that market interest rates had finally come to incorporate credit risk properly. Could this be construed as indicating that financial market developments had recently been normalizing?
  • Indirect financing via financial intermediaries continued to be burdened with the aftereffects of the economic"bubble," and the direct financing market was in the process of development. Under these circumstances, was the transmission mechanism of monetary policy effects weaker than it would be under the normal circumstances?
  • Financial institutions had adopted stricter lending standards partly reflecting their strengthened management effort toward improving the medium-term rate of return on capital. If so, wouldn't it be inappropriate to try to reverse this trend?
  • If a system based on the principle of self-discipline was established through the collapse of Japanese-style management and with stronger pursuit of higher rates of return on equity and investment, this would promote a natural selection of firms particularly among the small and medium-sized firms. In this case, how should the market mechanism be balanced with orderly developments in the economy?

With respect to the above-mentioned matters, a member commented that they should basically be deliberated separately from monetary policy discussions, although the issues contained many important points for discussion concerning the Japanese financial structure. However, with the Japanese financial system and the financial structure in a transition period, the members agreed that it was necessary to pay due attention to these issues in deciding monetary policy if anxiety among market participants about the stability of the domestic financial system should increase suddenly, with interest rates rising across the market.

At the conclusion of the Board's discussion, all of the members agreed that in the implementation of monetary policy for the immediate future, the Bank should maintain the current stance of monetary policy. A member commented that the uncollateralized overnight call rate should be maintained at the lowest possible level consistent with the Bank's stance.

Another member pointed out that if the Bank were to implement further monetary easing in the future, it might be worth considering the possible use of monetary targets, such as monetary base targeting, in addition to the conventional lowering of the official discount rate and the uncollateralized overnight call rate. A member showed sympathy with the view, but another member pointed out that the experiences of other countries had shown that such monetary policy management was not always successful.

Lastly, the Director General of the Coordination Bureau of the Economic Planning Agency complemented the comments of the Director General of the Agency at the morning session of the meeting. He explained that Diet deliberations were about to start on bills concerning the deregulation measures and structural reforms based on the emergency package of economic policies to conduct reforms in preparation for the 21st century, adopted on November 18, 1997. If these bills were passed in May or June, they would stimulate corporate activity in the latter half of this fiscal year and thereby promote economic recovery.

VI. Votes

At the conclusion of the Board's discussion, all of the members agreed that in the implementation of monetary policy for the intermeeting period ahead, the Bank should maintain the current easy stance of monetary policy and promote the continued permeation of its effects on interest rates on term instruments and on the stability of the market sentiment. In doing so, the Bank should monitor closely economic and financial developments, including the implementation of the economic stimulus package and its effects.

Based on this agreement, the chairman formulated the following policy proposal, on which votes were taken 6.

Policy Proposal:

The guideline for money market operations in the intermeeting period would be as follows, and publicized by the attached press release. The Bank of Japan would encourage the uncollateralized overnight call rate to remain on average slightly below the official discount rate.

Votes for this proposal:
Mr. M. Hayami
Mr. S. Fujiwara
Mr. Y. Yamaguchi
Mr. Y. Gotoh
Mr. S. Taketomi
Mr. T. Miki
Mr. N. Nakahara
Ms. E. Shinotsuka
Mr. K. Ueda
Votes against this proposal:
None
  1. 6Government representatives left at the time of voting.

VII. Approval of the Bank's View on Recent Economic and Financial Developments

At the end of the meeting, the Policy Board discussed"The Bank's View" on recent economic and financial developments, and put it to the vote.

The Board unanimously determined"The Bank's View," which would be published on April 13, 1998 in the Monthly Report of Recent Economic and Financial Developments (consisting of"The Bank's View" and"The Background"). 7

  1. 7The original full text, written in Japanese, of the Monthly Report of Recent Economic and Financial Developments was published on April 13, 1998 together with the English version of"The Bank's View." The English version of"The Background" was published on April 23, 1998.

Attachment

For immediate release

April 9, 1998
Bank of Japan

The Bank today held a Monetary Policy Meeting, a regular meeting of the Policy Board on monetary policy.

By unanimous vote, the Policy Board decided to leave monetary policy unchanged.