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Minutes of the Monetary Policy Meeting

on April 12 and 13, 2001
(English translation prepared by the Bank's staff based on the Japanese original)

May 23, 2001
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 12, 2001, from 3:02 p.m. to 5:01 p.m., and on Friday, April 13, from 9:02 a.m. to 12:17 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. S. Taketomi
Mr. T. Miki
Mr. N. Nakahara
Mr. K. Ueda
Mr. T. Taya
Ms. M. Suda

Government Representatives Present
Mr. S. Murakami, Senior Vice Minister, Ministry of Finance2
Mr. Y. Tamura, Deputy Vice Minister for Policy Planning and Coordination, Ministry of Finance3
Mr. T. Sakai, Senior Vice Minister, Cabinet Office4
Mr. Y. Kobayashi, Director General for Economic and Fiscal Management, Cabinet Office5

Reporting Staff
Mr. M. Matsushima, Executive Director
Mr. M. Masubuchi, Executive Director
Mr. S. Nagata, Executive Director
Mr. M. Shirakawa, Advisor to the Governor, Policy Planning Office
Mr. M. Amamiya, Associate Director, Policy Planning Office
Mr. I. Yamashita, Director, Financial Markets Department
Mr. H. Hayakawa, Director, Research and Statistics Department
Mr. T. Yoshida, Senior Manager, Research and Statistics Department
Mr. E. Hirano, Director, International Department

Secretariat of the Monetary Policy Meeting
Mr. I. Yokota, Director, Secretariat of the Policy Board
Mr. T. Murayama, Advisor to the Governor, Secretariat of the Policy Board
Mr. S. Hida, Manager, Secretariat of the Policy Board
Mr. S. Uchida, Senior Economist, Policy Planning Office
Mr. H. Yamaoka, Senior Economist, Policy Planning Office

  1. The minutes of this meeting were approved by the Policy Board at the Monetary Policy Meeting held on May 17 and 18, 2001 as "a document which contains an outline of the discussion at the meeting" stipulated in Article 20, Paragraph 1 of the Bank of Japan Law of 1997. Those present are referred to by their titles at the time of the meeting.
  2. Mr. Murakami was present on April 12.
  3. Mr. Tamura was present on April 13.
  4. Mr. Sakai was present on April 12.
  5. Mr. Kobayashi was present on April 13.

I. Summary of Staff Reports on Economic and Financial Developments6

A. Money Market Operations in the Intermeeting Period

Market operations in the intermeeting period were conducted in accordance with the guideline determined at the previous meeting on March 19, 2001.7 Specifically, operations were conducted so that the outstanding balance of current accounts at the Bank was around 5 trillion yen except for the period immediately after the new guideline for market operations was introduced and that around the fiscal year-end, during both of which the balance was increased to more than 5 trillion yen. As a result, the uncollateralized overnight call rate was generally steady at around 0.02-0.03 percent, although it rose somewhat above that level around the end of the fiscal year.

  1. 6Reports were made based on information available at the time of the meeting.
  2. 7The guideline was as follows:
    The Bank of Japan will conduct money market operations, aiming the outstanding balance of the current accounts at the Bank of around 5 trillion yen.
    Should there be a risk of financial market instability, e.g., a rapid surge in liquidity demand, the Bank will provide ampler liquidity irrespective of the guideline above.

B. Recent Developments in Financial Markets

Stock prices had recovered reflecting a decline in the unwinding of cross-shareholdings that had prevailed before the fiscal year-end, the Bank's monetary easing measures, growing expectations of a full-scale disposal of banks' nonperforming loans, and hopes that the government's emergency economic package would be effective.

In the bond market, yields on ten-year Japanese government bonds had declined to below 1.1 percent immediately after the previous Monetary Policy Meeting but had recently risen to 1.4-1.5 percent partly due to increasing concerns about a possible increase in issuance of government bonds and to profit-taking sales by investors who considered that no new market-moving factors would emerge in the near future.

In the foreign exchange market, the yen had fallen against the U.S. dollar reflecting a view that the Bank's monetary easing measures decided at the previous meeting might remain in place for a considerable while and speculation that the Japanese and U.S. authorities would tolerate a weaker yen. The yen subsequently rebounded slightly following remarks by Japanese government officials signaling that they were against a further weakening of the yen.

C. Overseas Economic and Financial Developments

In the United States, production was declining as firms were adjusting their inventories further. The deceleration in business fixed investment had become more evident, particularly in information technology (IT)-related sectors. Household spending had been firm, but the employment situation and its effects on consumer confidence would warrant attention.

Against this background, the Federal Open Market Committee (FOMC) decided at its meeting on March 20 to lower its target for the federal funds rate by 0.5 percentage point to 5.0 percent. The money market had factored in a further cut of 0.5-0.75 percentage point by mid-2001.

Euro-area economies seemed to be slowing with production growth declining moderately and the confidence of manufacturers continuing to deteriorate. However, the slowdown was moderate compared with other economies as private consumption remained firm due to an improvement in the employment situation and a series of tax cuts in major countries in the area.

East Asian economies had been slowing since autumn 2000 due to a deceleration in export growth. In some economies, domestic demand had also slowed, reflecting a deceleration in the growth of business fixed investment and sluggishness in private consumption. In this situation, the monetary authorities in Taiwan, Hong Kong, and the Philippines cut interest rates further in late March. Prices remained generally stable, but the inflation rate in some countries such as Korea and Indonesia was starting to increase.

D. Economic and Financial Developments in Japan

1. Economic developments

While domestic demand remained steady, exports fell rapidly reflecting a sharp economic slowdown in the United States and East Asia. Consequently, industrial production declined more sharply, and excessive inventories of electronic parts and some materials were building up. Business sentiment was worsening particularly in manufacturing, and the pace of improvement in corporate profits seemed to be slowing significantly in that sector. In this situation, machinery orders and business fixed investment plans for fiscal 2001 showed that firms were gradually becoming less willing to invest in plant and equipment. Income conditions of households had not yet deteriorated, but the effects of the decline in production were starting to be observed in some indicators such as new job offers and overtime hours. On the whole, adjustments in economic activity had been under way, as production was declining reflecting a fall in exports.

As for the economic outlook, (1) exports were likely to continue decreasing, (2) business fixed investment was likely to peak out gradually, and (3) from an inventory cycle perspective, inventory adjustments were needed, although not large ones. Thus, industrial production was expected to follow a declining trend for some time. The declining trend in production, if protracted, might cause growth in household income to stagnate and might affect household spending. As evident from the above, it was becoming unlikely that the mechanism of income generation starting from the corporate sector would continue to operate. Against this background, the adjustments of the economy were expected to continue for some time, mainly in production.

Looking over a longer period, Japan's economy would depend largely on developments in overseas economies, particularly that of the United States, and on information technology (IT)-related demand. The March Tankan (Short-Term Economic Survey of Enterprises in Japan) indicated that firms expected their sales and profits in fiscal 2001 to be firm despite a deterioration in business sentiment. Their expectations, however, seemed to be based on the assumption that overseas economies and IT-related demand would recover in the second half of the fiscal year, given that (1) firms had predicted that exports would rise in the second half after declining in the first half and (2) processing industries had predicted that their profits would increase in the second half after falling in the first half. Thus, if this assumption turned out to be wrong, actual sales and profits might diverge significantly from firms' forecasts. In addition, developments in stock prices and their effects on corporate and household sentiment and the effects of an acceleration in the disposal of nonperforming loans would warrant monitoring.

As for prices amid the ongoing economic adjustments, the balance between supply and demand in the domestic market was likely to exert downward pressure on prices. In addition, technological innovation, together with deregulation, which had led to a reduction of communications charges, would continue to restrain prices, and the effects of the streamlining of distribution channels, for example by the apparel sector, were likely to continue for a while. Various price indexes were expected to be generally weak for the time being. If downside risks to the economy materialized due to weaker-than-expected overseas economies, downward pressure on prices stemming from weak demand might intensify, and this would warrant careful monitoring.

2. The financial environment

The year-on-year growth rate of the monetary base decreased slightly in March from the previous month reflecting the unusually high level a year earlier when there were concerns about possible computer problems on February 29, 2000 and at the fiscal year-end. The monthly-average amount outstanding for March, however, was higher than the previous month. The growth rate of money stock (M2+CDs) had recently been increasing slightly reflecting the inflow of funds from postal savings that had matured and an increase in CP issuance.

Regarding firms' borrowing costs, short-term prime lending rates were lowered due to a sharp decrease in market rates following the Bank's further monetary easing, and the interest rate of CP at issuance had also declined. Moreover, long-term prime lending rates were lowered in April to record-low levels.

As for corporate financing conditions, the March Tankan suggested that the fall in stock prices had not affected financial institutions' lending attitude, with all sizes of firms reporting it as almost unchanged. A survey by the Japan Finance Corporation for Small Business indicated that firms' perception of their financial position had improved slightly, but according to the March Tankan it had deteriorated slightly mainly in manufacturing industry and according to a survey by Shoko Chukin Bank it had recently deteriorated somewhat. Regarding small firms' financial position, the effects of the termination of special guarantee systems for the financial stabilization of small and medium-sized enterprises at the end of March 2001 would also warrant monitoring.

As outlined above, the lending attitude of financial institutions and corporate financing conditions remained easy. For the time being, attention should be paid to the effects of the monetary easing measures taken by the Bank, and careful monitoring was still required of the effects of stock price developments on financial institutions' behavior and firms' fund-raising conditions.

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

Members discussed economic and financial developments taking into account the results of economic and financial indicators that had become available since the previous meeting, including the March Tankan, and reports by general managers of the Bank's branches at their regular meeting.

Members shared the view that adjustments in economic activity had been under way with the slowdown in exports and production of mainly IT-related goods becoming clear. One member said that the economy had weakened after a temporary lull and was set to deteriorate further.

Many members expressed the view that according to the March Tankan and the reports of general managers of the Bank's branches, the slowdown in the corporate sector had become clearer as evident in the following: (1) exports and production had been declining more sharply; (2) the improvement in corporate profits had slowed significantly and firms were becoming less willing to invest in plant and equipment; and (3) business sentiment had deteriorated, mainly in manufacturing industry.

One of these members said that it was inevitable that exports would decline for a while reflecting the sharp slowdown in the U.S. economy and its effects on Asian economies. This member referred to the possibility of the current easy monetary policy leading to a weaker yen and thus affecting exports positively. This member continued, however, that, amid a more pronounced slowdown in the world economy, an export drive by Japan could trigger renewed trade friction and therefore manufacturers were drawing up extremely conservative export plans.

One member noted that adjustments in production had been observed mainly in the IT-related and construction industries. This member added that attention should also be paid to reports at the Bank's branch managers' meeting on the effect of increased overseas production by Japanese firms on domestic production. Another member said that the decrease in production and efforts to cut inventories in the electrical machinery industry were beginning to affect production in related industries such as nonferrous metals and industrial machinery. A different member said that the number of industries that were starting to adjust inventories had gradually increased and manufacturers, mainly of steel, pulp and paper, petrochemical products, and semiconductors, were likely to continue to reduce production. This member added, however, that adjustments in production would not be as large as in the past as inventory management had improved with the use of IT. The member continued that there was still a structural problem of excess supply in some materials industries, and inventory adjustment might be prolonged as nonviable firms were continuing a high level of production in a bid to survive.

A few members said that large manufacturers' profits were likely to decrease in the first half of fiscal 2001. Many members said that although the Tankan indicated that firms expected their sales and profits to rise in the second half of fiscal 2001, their forecasts were highly susceptible to external factors since the forecasts were based on the assumption that the U.S. economy and IT-related demand would recover in the second half of the fiscal year. One of these members said that these rather optimistic forecasts should be viewed with caution as they were at odds with the pessimistic business sentiment seen in the same survey. On these grounds, members agreed that, judging from leading indicators such as machinery orders and business fixed investment plans for fiscal 2001, business fixed investment was likely to weaken.

Many members said that private consumption, which had recently been firm, would barely underpin the economy and could not be expected to become its driving force, given that the employment and income situation was likely to deteriorate. One member said that it was encouraging that some indicators related to consumption were firm. This member pointed out, however, that close attention should be paid to the possibility that the economy would fall into a negative cycle where sluggishness in the corporate sector would adversely affect the employment and income situation and restrain household spending, eventually negatively affecting corporate activity. Another member commented that consumption would rely largely on replacement demand and demand for products with new functions since it was being restrained by (1) structural changes in consumer spending, (2) saturation of consumption, and (3) uncertainty over job security, the pension system, and life after retirement. This member added that against this backdrop, it should be considered that private consumption was at normal levels given that the level of household spending continued to be consistent with household income and the aggregate supply of consumer goods was recovering. Further, this member said that when structural changes were taking place, it would take time for the recovery of the corporate sector to affect the household sector and prompt an increase in consumption.

Based on the above discussions, members agreed that adjustments in Japan's economy, mainly in production, were likely to continue for the time being and it was becoming unlikely that the mechanism of income generation starting from the corporate sector would continue to operate.

Many members expressed the view that developments in the U.S. economy and in global demand for IT-related goods would have a considerable effect on Japan's economic outlook.

Regarding the U.S. economy, one member pointed out that adjustments had been taking place in production, employment, and business fixed investment, in particular in the manufacturing sector. This member said, however, that although corporate and consumer confidence remained at a low level, it had stopped deteriorating and seemed to be regaining some stability after a rapid deterioration from late 2000 to early 2001. On this basis, this member expressed the view that the most likely scenario for the U.S. economy was one in which it would start recovering in the second half of the year or at the end of 2001. In response, a different member said that the contribution of cyclical factors to the improvement in labor productivity in the 1990s might have been larger than had been thought, and warned that there was a possibility that the U.S. economy might fall into a vicious circle starting from a decline in the economic growth rate. Another member pointed out the following risks to the U.S. economic outlook: (1) since there had not been many layoffs so far, firms might have excess workers, and there could be an increase in the unemployment rate, which would damage consumer confidence; and (2) this summer, gasoline prices might surge and the supply of electricity might be reduced due to a possible water shortage.

One member expressed the view that it was not appropriate to discuss just the effects of the slowdown in the world economy on the Japanese economy and that careful monitoring was required of the interactions among economies where production and inventory adjustments were ongoing. The member continued that the key to assessing the outlook for IT-related sectors was local demand in Japan and other Asian economies in addition to developments in the U.S. economy.

Many members commented on the effects of structural reform, including the disposal of financial institutions' nonperforming loans. One member gave high points to the Government's emergency economic package announced the previous week because it included measures to strengthen the financial system, such as steps to expedite disposal of nonperforming loans, and other measures to promote structural reform and thus differed from those in the past, which placed emphasis on public investment. This member expressed the view that structural reform would not advance without efforts by the private sector, and hoped that the package would fuel structural reform and further accelerate it in various sectors. In response, a different member expressed the opinion that it was important to expedite the disposal of loans to bankrupt borrowers and to borrowers in danger of bankruptcy, and revise debtor categories to reflect the current state of debtors.

One member said that solving the nonperforming-loan problem was a delicate issue since aggressive disposal of nonperforming loans could create short-term deflationary pressure, while on the other hand, ignoring the problem could reignite anxiety about the financial system. In relation to this point, a different member expressed concern that the deflationary pressure that would arise from removing nonperforming assets from balance sheets could make it difficult to advance structural reform of the Japanese economy at a time when the global economy was deteriorating. The member expressed concern that the likelihood was increasing of a hard landing caused by deterioration in financial markets. One member said that the effects of corporate bankruptcies on unemployment would vary depending on failed firms' subcontract structure. This member and a different member added that when considering the amount of additional unemployment resulting from structural adjustments, it was necessary to consider to what extent such adjustments would actually affect jobs and projects.

Based on the above assessments of the economic and financial situation, members shared the following views on prices: (1) the balance between supply and demand in the domestic market was likely to exert downward pressure on prices; (2) technological innovation, streamlining of distribution channels, and deregulation were likely to continue to restrain prices; and (3) therefore, prices were expected to be weak for the time being. One member commented that prices were falling partly due to a continuation of (1) efforts to adjust prices to international levels, (2) nonviable firms' aggressive pricing that ignored production costs, and (3) an inflow of low-priced imports. A different member commented that price declines caused by "destructive" suppliers, which slashed prices to levels below cost in an attempt to survive, were continuing and that this trend would continue unless progress was made in structural adjustment and in reorganization of industries. Another member said that the year-on-year rate of change in the CPI was expected to remain at current levels of slightly below zero percent for a while for the following reasons. First, although the depreciation of the yen was beginning to have an effect on prices, this was likely to be offset by weak domestic demand for the time being. And second, wages were likely to be broadly unchanged for a while, and, thus it was unlikely that they would exert strong downward pressure on prices.

One member noted that firms' borrowing cost had declined and the March Tankan indicated that the lending attitude of financial institutions had hardly changed. This member continued that this suggested that corporate financing conditions remained easy as a whole, and the member would watch to see the effects of the monetary easing and continue to monitor developments in stock prices, which seemed to have recovered somewhat, and their effects on the economy.

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

Members discussed the monetary policy stance for the immediate future.

Members concurred that, although the economy had deteriorated further, the Bank had adopted drastic measures at the previous Monetary Policy Meeting anticipating that such a situation might emerge, and for the time being, the Bank should examine the effects of the measures. All members therefore agreed that the Bank should maintain the current guideline for market operations.

On this basis, members exchanged views on the effects of the monetary easing measures decided at the previous meeting.

Many members were of the opinion that the measures were producing the intended effects on financial and capital markets.

Some members expressed the view that the Bank's new commitment in terms of policy duration was being very effective in reducing interest rates, including those on instruments with relatively long maturities. These members pointed out that interest rates on term instruments, including those with fairly long maturities, had declined and investors had slightly increased the duration of their bond portfolios. Regarding long-term interest rates, which had risen somewhat compared to the level before the previous meeting, some members expressed the view that this could be attributable to (1) the fact that the market had factored in to a large extent the Bank's monetary easing prior to the decision, and (2) concerns that the supply-demand balance of government bonds might deteriorate due to a possible increase in fiscal expenditure.

Turning to stock prices, one member noted that the monetary easing measures decided at the previous meeting had been very effective in that they had helped the Nikkei 225 Stock Average, followed by the Dow Jones Industrial Average, and then the Nasdaq composite index to bottom out and recover. A different member considered that, judging from comments made by investors, stock prices had been pushed up not only by the change in the Bank's target for money market operations and its strong commitment in terms of policy duration, but also by the fact that the monetary easing measures as a whole were expected to encourage disposal of financial institutions' nonperforming loans. Regarding the recent depreciation of the yen, one member expressed the view that, although some attributed the decline to sales of government bonds by foreign investors and an increase in yen carry trades, the impact of these factors had been limited so far.

As a result of the above discussions, many members agreed that (1) the reduction in interest rates and the Bank's commitment in terms of policy duration were producing virtually the same effects as the zero interest rate policy, and that (2) to determine other effects, it was necessary to further examine the effects of the change in market expectations and of any constant excess of reserves held by financial institutions. One member commented that, since the new measures comprised a variety of components, it was more difficult to monitor their effects than those of measures employed in the past.

Members shared the view that it was hard to discuss the scope for further monetary easing until the effectiveness of the current policy had been carefully monitored and analyzed. On this basis, the following points were discussed from a theoretical point of view.

One member commented that the effects of a further increase in the target for the outstanding balance of current accounts at the Bank were expected to be limited as interest rates were already very low.

As to the feasibility of the Bank further increasing the target, a few members pointed out that it might not be that easy to achieve a higher target, since financial institutions might not need extra funds. On this point, another member commented that the bid-to-cover ratio in the Bank's market operations auctions had not declined so far.

Members exchanged views on the effects of the Bank's outright purchases of government bonds. One member said that it was pointless to try to reduce long-term interest rates directly through outright purchases of government bonds because long-term rates were basically equal to the average of expected future short-term rates, which were already low as a result of the virtually zero interest rates under the current policy and commitment in terms of policy duration. A different member said that it was impossible for monetary policy to control long-term interest rates in the short term, since they were essentially determined by expectations of future economic growth and inflation. The member concluded, therefore, that it was not appropriate to try to curb rises in long-term interest rates by increasing outright purchases of government bonds. This member explained that as Japan's fiscal deficit was the largest among major industrial countries, an increase in the Bank's outright purchases of government bonds might give the impression that the Bank would start underwriting government bonds or that the country was losing fiscal discipline, thereby negatively affecting long-term interest rates. In relation to this, another member pointed out that (1) compared with the time of the depression of the early Showa period, the ratio of fiscal deficit to nominal GDP was higher and the problem of firms' heavy debt burden was more serious, although the current account balance was better, and (2) the credit default swap rate on government bonds remained high and it was necessary to examine what effects the new BIS guidelines, due to be implemented in 2004, would have.

A few members commented on the unstable relationship between base money, money stock, and the economy and prices. One member explained the background as follows: (1) the credit creating function of financial institutions was not operating properly; (2) the need for firms to restructure their balance sheets was strong; and (3) households were very anxious about their future. This member continued that, since this situation was not due to liquidity constraints, an increase in the Bank's supply of base money would not necessarily increase financial institutions' lending or money stock, and thus the effectiveness of monetary policy in terms of such an increase would be limited. Therefore, fiscal measures and the private sector's efforts to undertake structural reform had to operate in combination. A different member noted that it was difficult to determine the appropriate level for banks' reserves, as structural factors, including those in the financial system, were intensifying.

One member commented that the Bank should make use of the methods it had been studying to enhance the effectiveness of monetary policy, for example, it should periodically conduct monetary policy simulations based on various policy rules, and produce, as did some industrial countries' central banks, forecasts based on the monetary gap to check the effectiveness of the Bank's monetary policy from a variety of perspectives. The member continued that the results of the forecasts and simulations should be made known to Policy Board members.

IV. Remarks by Government Representatives

The representative from the Ministry of Finance made the following remarks.

(1) Japan's economy was weakening: the employment situation remained severe; private consumption was generally unchanged; and in the corporate sector, production was declining reflecting a decrease in exports. Factors such as the deceleration in the U.S. economy gave cause for concern about Japan's economic outlook. Regarding prices, the CPI and the GDP deflator continued to decrease year on year, and concern remained as to the impact of the fall in prices on the economy through a rise in real interest rates and real debt burden.

(2) Under these circumstances, the Government would make efforts to smoothly and steadily implement the fiscal 2001 budget, recently approved by the Diet. The Government had compiled the emergency economic package based on the understanding that structural reform, including the disposal of nonperforming loans, should be undertaken immediately. This package contained concrete measures to revitalize the financial and corporate sectors, reform the structure of the securities market, revitalize urban areas, and increase liquidity of land assets. The Government hoped Japan's structural reform would make further progress as a result of steady implementation of these measures.

(3) The Government would like to ask the Bank to conduct monetary policy appropriately--for example, flexibly provide the market with ample funds under the new procedures for money market operations giving due consideration to developments in the economy and markets--and take into consideration the Government's measures to contribute to economic growth through the achievement of price stability.

The representative from the Cabinet Office made the following remarks.

(1) In the Cabinet Office's Monthly Economic Report for April, the Government revised its assessment of the economy downward for the third consecutive month, to "the economy is weakening," for the following reasons. First, the decrease in production had become clear. And second, business sentiment had deteriorated sharply, especially in manufacturing, with growth in corporate profits slowing down. As for the outlook, factors that gave cause for concern--the slowdown of the U.S. economy and signs of weaker business fixed investment--continued from the previous month.

(2) The Government believed that steady implementation of the measures in the emergency economic package would lay the foundation for the future of Japan's economy. It would also continue to conduct economic and fiscal policy in an appropriate and timely manner, to contribute to the structural reform of the economy, with continued focus on economic recovery.

(3) The Government would like to ask the Bank to conduct monetary policy in an appropriate, timely, and preemptive manner to achieve price stability, as there were factors that gave cause for concern about the economic outlook.

V. Votes

Based on the above discussion, the members shared the view that the current guideline for money market operations should be maintained. To reflect this view, the chairman made the following proposal.

Chairman's Policy Proposal:

The guideline for money market operations in the intermeeting period ahead would be as follows, and would be made public by the attached statement (see Attachment).

The Bank of Japan will conduct money market operations, aiming the outstanding balance of the current accounts at the Bank at around 5 trillion yen.

Should there be a risk of financial market instability, e.g., a rapid surge in liquidity demand, the Bank will provide ampler liquidity irrespective of the guideline above.

Votes for the proposal: Mr. M. Hayami, Mr. S. Fujiwara, Mr. Y. Yamaguchi, Mr. S. Taketomi, Mr. T. Miki, Mr. N. Nakahara, Mr. K. Ueda, Mr. T. Taya, and Ms. M. Suda.

Votes against the proposal: None.

This was the first Monetary Policy Meeting that had been held over two days, and the chairman once again requested that strict confidentiality be maintained in regard to the discussions. One member requested that members be given enough time at the meetings to express their opinions fully, as in the past.

VI. Discussion on the Bank's View of Recent Economic and Financial Developments

The Policy Board discussed "The Bank's View" of recent economic and financial developments, and put it to the vote. By unanimous vote, the Board decided to publish "The Bank's View" on April 16, 2001 in the Monthly Report of Recent Economic and Financial Developments (consisting of "The Bank's View" and "The Background").8

  1. 8The original full text, written in Japanese, of the Monthly Report of Recent Economic and Financial Developments was published on April 16, 2001 together with the English version of "The Bank's View." The English version of "The Background" was published on April 17, 2001.

VII. Approval of the Minutes of the Monetary Policy Meeting

The Policy Board approved unanimously the minutes of the Monetary Policy Meeting of February 28, 2001 for release on April 18, 2001.


Attachment

For immediate release

April 13, 2001
Bank of Japan

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

The Bank of Japan will conduct money market operations, aiming the outstanding balance of the current accounts at the Bank at around 5 trillion yen.

Should there be a risk of financial market instability, e.g., a rapid surge in liquidity demand, the Bank will provide ampler liquidity irrespective of the guideline above.