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Minutes of the Monetary Policy Meeting

on March 15 and 16, 2004
(English translation prepared by the Bank's staff based on the Japanese original)

April 14, 2004
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 Monday, March 15, 2004, from 1:59 p.m. to 3:56 p.m., and on Tuesday, March 16, from 8:59 a.m. to 11:48 a.m.1

Policy Board Members Present Mr. T. Fukui, Chairman, Governor of the Bank of Japan
Mr. T. Muto, Deputy Governor of the Bank of Japan
Mr. K. Iwata, Deputy Governor of the Bank of Japan
Mr. K. Ueda
Mr. T. Taya
Ms. M. Suda
Mr. S. Nakahara
Mr. H. Haru
Mr. T. Fukuma

Government Representatives Present Mr. Y. Yamamoto, Senior Vice Minister of Finance, Ministry of Finance2
Mr. H. Tsuda, Deputy Vice Minister for Policy Planning and Coordination, Ministry of Finance3
Mr. T. Ito, Senior Vice Minister for Economic and Fiscal Policy, Cabinet Office2
Mr. Y. Nakajo, Director General for Economic and Fiscal Management, Cabinet Office3
Reporting Staff Mr. E. Hirano, Executive Director (Assistant Governor)
Mr. M. Shirakawa, Executive Director
Mr. A. Yamamoto, Executive Director
Mr. Y. Maehara, Adviser to the Governor, Policy Planning Office
Mr. H. Yamaguchi, Adviser to the Governor, Policy Planning Office
Mr. S. Kushida, Deputy Director-General, Policy Planning Office
Mr. H. Nakaso, Director-General, Financial Markets Department
Mr. H. Hayakawa, Director-General, Research and Statistics Department
Mr. K. Momma, Deputy Director-General, Research and Statistics Department
Mr. A. Horii, Director-General, International Department
Secretariat of the Monetary Policy Meeting Mr. K. Akiyama, Director-General, Secretariat of the Policy Board
Mr. T. Takei, Adviser to the Governor, Secretariat of the Policy Board4
Mr. K. Murakami, Deputy Director, Secretariat of the Policy Board
Mr. N. Yoshioka, Director, Head of Planning Division II, Policy Planning Office5
Mr. H. Yamaoka, Senior Economist, Policy Planning Office
Mr. K. Masaki, Senior Economist, Policy Planning Office
Mr. T. Kurihara, Director, Head of Money and Capital Markets Division, Financial Markets Department5

  1. The minutes of this meeting were approved by the Policy Board at the Monetary Policy Meeting held on April 8 and 9, 2004 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. Messrs. Yamamoto and Ito were present on March 16.
  3. Messrs. Tsuda and Nakajo were present on March 15.
  4. Mr. Takei was present on March 16.
  5. Messrs. Yoshioka and Kurihara were present on March 16 from 8:59 a.m. to 9:13 a.m.

I. Summary of Staff Reports on Economic and Financial Developments6

A. Money Market Operations in the Intermeeting Period

The Bank conducted market operations in accordance with the guideline decided at the previous meeting on February 26, 2004.7 The outstanding balance of current accounts at the Bank moved at around the 32-34 trillion yen level. As a result of the market operations, the weighted average of the uncollateralized overnight call rate was 0.001 percent.

B. Recent Developments in Financial Markets

Money market rates remained stable at low levels against the background of the Bank's provision of ample liquidity.

Long-term interest rates rose temporarily to around 1.4 percent partly due to the rise in stock prices and the depreciation of the yen against the U.S. dollar, falling back thereafter partly due to the decline in U.S. long-term interest rates, and were recently in the range of 1.25-1.30 percent. The yield differentials between Japanese government bonds (JGBs) and corporate bonds remained essentially unchanged.

Japanese stock prices had been on an upward trend partly reflecting stronger expectations for the economic recovery and depreciation of the yen against the U.S. dollar. The Nikkei 225 Stock Average was currently in the range of 11,000-12,000 yen.

The yen had depreciated against the U.S. dollar due to the decline in market participants' expectation that the dollar would depreciate, and it was recently at the 110-111 yen level.

C. Overseas Economic and Financial Developments

The U.S. economy was showing steady and balanced recovery. Private consumption was on a moderate upward trend and housing investment remained at a high level. The recovery in firms' activities was spreading as orders in the manufacturing sector and business fixed investment were on an uptrend and production was increasing moderately. The employment situation was improving very slowly but steadily.

With regard to prices, an increase in input prices, such as international commodity prices, had been largely absorbed by the corporate sector and had not, with exceptions such as gasoline prices, been passed on as higher final goods prices so far.

In the euro area, corporate activity was recovering at a moderate pace, as business fixed investment was bottoming out, albeit with some fluctuations, and production was recovering, particularly in capital goods. However, household spending was sluggish and the momentum for economic recovery was still weak. The economy in the United Kingdom was showing steady growth.

Economic recovery remained strong in East Asian economies. In China, both domestic and external demand continued to be robust. In the NIEs and ASEAN countries, exports and production were increasing, especially in IT-related goods.

In U.S. and European financial markets, U.S. stock prices had been around the recent high levels partly due to good corporate profits, but fell thereafter reflecting weaker-than-expected employment statistics in the United States released on March 5, 2004. Long-term interest rates in the United States and Europe declined reflecting the results of employment statistics in the United States.

As for financial markets in emerging economies, stock prices rose and the yield differentials between their sovereign bonds and U.S. Treasuries were stable at low levels in many of these markets.

D. Economic and Financial Developments in Japan

1. Economic developments

Real exports had recently increased substantially. They exhibited a considerable increase in the October-December quarter of 2003 reflecting the recovery in overseas economies, and they continued to grow substantially in January 2004, by 4.7 percent from the monthly average of the October-December quarter, due particularly to exports to China, the ASEAN countries, and the European Union (EU). Temporary factors, such as the lowering of tariffs by China at the beginning of 2004 and an increase in spot exports to the ASEAN countries, seemed to have contributed to the high growth. By goods, exports of capital goods and parts continued to be robust, and those of intermediate goods, such as chemicals and steel products, also increased substantially.

With regard to developments in the corporate sector, corporate profits continued to improve steadily. Judging from the ratio of current profits to sales in the Financial Statements Statistics of Corporations by Industry, Quarterly, large manufacturing firms, which had recovered rapidly ahead of other categories of firms, were recovering at a slower pace than before although the ratio was high, while the recovery in nonmanufacturing firms had gradually become clearer. Thus, the recovery in profits was spreading to a wider range of firms than before. The profits of large firms both in manufacturing and nonmanufacturing industries were forecasted to increase steadily in fiscal 2003 and 2004.

In this situation, business fixed investment continued its path of recovery. Business fixed investment in nominal terms registered high growth in the October-December quarter of 2003, based on data in the Financial Statements Statistics of Corporations by Industry, Quarterly. Shipments of capital goods (excluding transport equipment) continued to increase substantially in January 2004 from the monthly average of the October-December quarter of 2003, which had shown a large increase.

With regard to the employment situation, job offers had been improving markedly, reflecting the labor market conditions. The number of employees in the Labour Force Survey had recently been slightly above the previous year's level. The rate of year-on-year decline in the number of regular employees in the Monthly Labour Survey had been diminishing. The unemployment rate was on a gradual downtrend, although it still remained high. The decline in household income was gradually coming to a halt, but it was not confirmed that the decline had stopped, due to factors such as the drop in winter bonuses.

Private consumption was currently showing some positive movements, as indicators were relatively strong overall in January 2004 as in the October-December quarter of 2003.

Reflecting the above developments in demand, production continued to increase as seen in the considerable increase of 3.2 percent in January 2004 from the monthly average of the October-December quarter of 2003, which had shown substantial growth of 3.7 percent on a quarter-on-quarter basis. As for the outlook, production was expected to continue increasing, supported by the increase in exports and business fixed investment and by favorable sales of durable consumer goods. The pace of increase, however, was likely to be moderate, compared to the very high growth in the past few months.

With regard to prices, international commodity prices continued to rise sharply overall. As a result, import prices were increasing. The pace of increase in domestic commodity prices accelerated in February, particularly for nonferrous metals and steel products.

Domestic corporate goods prices had been rising compared to the levels of three months earlier, reflecting the strengthening of overseas and domestic commodity prices. The year-on-year rate of change in consumer prices (excluding fresh food) had been close to zero percent, while temporary factors such as the rise in rice prices had exerted upward pressure.

2. Financial environment

The pace of decline of credit demand in the private sector was becoming somewhat moderate, since corporate activity had started to recover, as seen in the increase in business fixed investment, while firms continued to reduce their debts. The lending attitude of private banks had been slightly more accommodative on the whole, although they remained cautious about extending loans to firms with high credit risks. The rate of decline in lending by private banks (after adjustment for extraordinary factors) was on a slightly diminishing trend, with the year-on-year rate of decline at 1.7 percent in February. The lending attitude of financial institutions as perceived by firms and the financial positions of firms were in general improving somewhat, although small firms continued to perceive both as severe.

The issuing environment for CP and corporate bonds was favorable on the whole. Issuance rates and credit spreads were stable at low levels, and the amount outstanding of CP and corporate bonds issued continued to be above the previous year's level.

The growth rate of banknotes in circulation declined due mainly to decreasing anxieties about the financial system, and was recently in the 2.0-3.0 percent range. The year-on-year growth rate of the monetary base was moving around 15 percent. The ratio of the monetary base to nominal GDP continued to increase, and was currently at an extremely high level. The year-on-year growth rate of the money stock (M2+CDs) was at the 1.0-2.0 percent level.

The number of corporate bankruptcies continued its downtrend, declining by 18.2 percent year on year in January.

  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 at the outstanding balance of current accounts held at the Bank at around 30 to 35 trillion yen.
    Should there be a risk of financial market instability, such as a surge in liquidity demand, the Bank will provide more liquidity irrespective of the above target.

II. Amendment to Guidelines on Eligible Collateral

A. Staff Proposal

The Banks' Shareholdings Purchase Corporation (BSPC) had recently begun to raise funds with government guarantee in the form of loans on deeds, in addition to overdrafts.

The staff proposed that the Bank amend Guidelines on Eligible Collateral to accept loans on deeds to the BSPC with government guarantee as eligible collateral for the Bank's provision of credit. This would contribute to facilitating its money market operations.

B. Discussion by the Policy Board and Vote

Members voted unanimously to approve the proposal and agreed that the decision should be made public.

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

A. Economic Developments

Many members agreed that overseas economies were on a recovery trend overall, particularly the U.S. and East Asian economies.

One member said that it was generally considered that the ongoing recovery of overseas economies was sustainable to some extent. This was because the recent rise in international commodity prices had largely been offset by increases in productivity in major industrial countries which contributed to constraining an increase in general prices, and this had enabled them to maintain an accommodative monetary policy.

One member commented on the U.S. economy that the wealth effect stemming from firm housing prices was underpinning household spending.

Some members commented on the slow recovery in the employment situation in the United States. A few members raised its possible effect on consumer sentiment as a downside risk. A different member expressed the view that the slow recovery in the number of employees was partly attributable to the following factors: firms had been cautious about hiring regular employees due to the increase in medical insurance costs; and firms in the services sector were outsourcing to increase productivity. This member, however, added that the economic recovery would gradually stimulate job creation, although the time lag between the two was longer than before, and this was apparent in the fact that, while the number of employees was still slow in increasing, the U.S. unemployment rate was already on a downtrend.

A different member pointed out that the effects of the surge in gasoline prices on households were cause for concern and expressed the view that growth in consumption would slow as the effects of tax cuts fell off.

Some members said that attention should be paid to the following points in assessing overseas economies: the impact of the heightening concern about terrorist attacks on consumer sentiment; and the slow pace of economic recovery in the euro area due partly to the appreciation of the euro.

With regard to Japan's economy, many members said that exports were increasing substantially, particularly to China, reflecting the recovery trend of overseas economies. One of these members added that the remarkably high growth in January was partly attributable to temporary factors such as China's lowering of tariffs.

With regard to the corporate sector in Japan, many members said that corporate profits continued to increase as firms, particularly manufacturing firms, improved their profitability. In this situation, business fixed investment was also increasing markedly.

One of these members said that some firms were setting up their development bases for high-value-added products, particularly digital appliances, in Japan, and there were also some positive developments in the allocation of firms' increased profits, for example, to business fixed investment, research and development, and mergers and acquisitions, although they continued to repay debt.

One member assessed the factors contributing to the increase in corporate profits. In the manufacturing sector, unit labor cost was declining mainly due to increases in productivity, while in the nonmanufacturing sector unit labor cost continued to be lowered mostly through cuts in wages. The member continued that there had been some progress in dealing with structural adjustment pressures such as excessive debt and the increased share of labor in income distribution, and in this situation even nonmanufacturing firms would become more eager to increase investment, starting with those whose business condition had been improving. A few other members said that corporate profits and business fixed investment were recently increasing even at small firms and nonmanufacturing firms, and the increase in business fixed investment could be seen in a broader range of firms than before.

Some members commented on the effects of the recent rise in commodity prices on corporate profits.

One member said that it was unlikely that the rise in international commodity prices reflecting the recovery of the world economy would squeeze corporate profits on a macroeconomic level for the time being, since the rise in materials prices would be offset by improvement in productivity as well as by increases in exports and sales volumes. A different member pointed out that, based on the Financial Statements Statistics of Corporations by Industry, Quarterly for the October-December quarter of 2003, corporate profits had increased because the effect of the increase in sales volumes had more than offset the effect of the rise in materials prices. Some members including these members commented that it was necessary to continue monitoring developments in corporate profits.

With regard to the household sector, many members pointed out that many of the indicators related to private consumption, such as sales of digital appliances, sales at retail stores and department stores, and new passenger-car registrations, were increasing recently or remained firm.

These members added that, meanwhile, the fall in household income was still in the process of coming to a halt as firms continued to constrain labor costs. Some members commented on why private consumption was showing some positive movements despite the lack of a marked increase in household income.

One member expressed the view that private consumption had been showing signs of moderate recovery since the end of 2003, and this could be because consumer sentiment had been improving somewhat due to improvements in the employment situation, as evident in the increase in the number of employees, and also due to the wealth effect stemming from rising stock prices. A different member said that the recent firmness in private consumption had been due partly to the increase in the value of financial assets in real terms resulting from the fall in prices to date, in addition to the following factors: improvements in the employment situation; the change to a positive figure in regular payments; and expectations of an increase in income, particularly of an increase in summer bonuses.

A different member, furthermore, pointed out the possibility that the improvement in consumer sentiment reflecting improvements in the employment situation, the decrease in the number of bankruptcies, and the abatement of overly pessimistic views about the outlook for the Japanese economy had contributed to the recent positive movements in private consumption. This member added that private consumption could remain firm relative to household income if consumer sentiment continued to improve. However, since consumer sentiment tended to be easily affected by various factors such as concerns about the reform of the pension system, it was necessary to continue paying careful attention to developments in private consumption.

One member said that the recent growth in indicators related to retail sales could partly be due to the temporary surge in demand for digital appliances. A few members including this member expressed the view that it was necessary to monitor indicators to be released in the near future in order to carefully assess the sustainability of the recent improvement in private consumption. A different member added that the outlook for private consumption was still uncertain, considering future developments in discussions regarding the tax and pension systems.

Many members said that production was increasing driven by growth in final demand, such as exports and business fixed investment. One of these members pointed out that, in every region of the country, an increase in production had become evident led by the production of electronic parts and devices.

Some members said that, despite the increase in production, firms were still cautiously avoiding accumulation of inventories, and as a result the inventory level remained low.

One member expressed the view that firms had been able to keep inventories to a low level due to improvements in their inventory management, in addition to the current favorable state of final demand. A few other members expressed the view that, judging from the inventory cycle, the risk that the economic recovery would be dampened by endogenous and cyclical factors was small for the time being, and the current economic recovery was likely to be sustainable in this regard.

Based on these discussions, members agreed that it was appropriate to maintain the assessment that the economy was recovering gradually. Many members added that the sustainability of the current conspicuous strength in some demand components should be examined based on indicators to be released in the near future.

Many members commented on developments in prices. International commodity prices had been rising at a rapid pace, especially since autumn 2003. Against this background, domestic commodity prices were also increasing. In addition, the year-on-year change in domestic corporate goods prices was virtually zero percent, and the rate of change from three months earlier had changed to positive. The year-on-year rate of change in consumer prices became virtually zero percent in the final quarter of 2003, and thereafter it had been moving around zero percent. To date, the tendency for price rises in commodities and producer goods upstream to be passed on to final goods prices and consumer prices downstream was not much in evidence.

One member said that the rise in international commodity prices had not been reflected to any great extent in downstream prices such as consumer prices, and this tendency could also be seen in other industrial countries, including the United States. This member explained that this was because effects of a rise in upstream prices had been to a great extent absorbed by the following factors before they reached downstream prices. First, productivity had improved due to technological innovation. Second, wage increases had been constrained reflecting structural changes in the labor market, such as changes in the relationship between employers and employees and diversification in employment styles. And third, as a result of these changes, unit labor cost had declined.

Some members, including this member, said that this mechanism was also likely to operate for the time being in Japan where firms continued to constrain personnel expenses. On this basis, these members expressed the view that, although attention should be paid to rises in commodity and corporate goods prices, there was no imminent possibility of a rise in consumer prices. A different member said that in Japan the weakness in services prices, especially in housing rent, had been exerting downward pressure on consumer prices.

One member said that, given the improvement in the supply-demand balance, as seen in the fact that the current capacity utilization ratio was higher than the recent peak in 2000, firms were more easily able to pass on the rise in materials prices in product prices. A different member pointed out that in the iron and steel industry, negotiations about raising prices were progressing gradually. Another member said that in Taiwan, Hong Kong, Singapore, and China, downstream prices were on an upward trend.

Many members, including these members, expressed the view that the rise in commodity prices and its effects on other prices and corporate profits continued to require close monitoring.

One member said that there were two possible scenarios for prices starting to increase steadily. First, an increase in materials prices could be passed on to final goods prices worldwide. And second, the rate of change in nominal wages could become positive and remain steadily positive, and this could be reflected in developments in services prices.

A different member said that the GDP growth rate would be around 3 percent in fiscal 2003, and based on the assumption that it would grow at the same rate in fiscal 2004 and the potential growth rate of the economy was around 1.5 percent, the output gap was expected to decline by about 3 percentage points over the two-year period. The member added that, based on the downward-sloping Phillips curve, it was reasonable to project that the narrowing of the output gap would eventually affect the inflation rate, albeit with a time lag.

B. Financial Developments

Many members said that the money market was generally stable despite the approach of the fiscal year-end at the end of March, and there was little concern about the availability of funds maturing beyond the fiscal year-end. Some members added that corporate financing conditions were stable on the whole, and the financial environment overall was supporting the recent economic recovery.

One member said that the effects of the increase in the issuance of financing bills (FBs) on the money market warranted continued monitoring. A different member said that concern about a possible further increase in the issuance of FBs required attention in terms of the government's management of securities issuance. With regard to the autonomous functioning of the money market mechanism, this member said that the recent developments in FB yields, which were still extremely low, were considered to be in line with its natural functioning.

Some members pointed out that the Nikkei 225 Stock Average had recovered to over the 11,000 yen level, and market participants had reduced expectations of further depreciation of the U.S. dollar. One member expressed the view that developments in foreign exchange markets continued to require close monitoring because, although concerns about appreciation of the yen in the immediate future had decreased, market perception that the yen would appreciate in the longer term persisted.

With regard to private banks' lending activity, some members said that the lending attitude of banks, especially those with high financial strength, was more active than before.

One of these members expressed the view that these developments had eased small and medium-sized firms' concerns about raising funds for business fixed investment, and this had made them eager to increase fixed investment. A few members, including this member, said that the current level of business fixed investment was still below the level of cash flow, which was rising due to the increase in corporate profits, and therefore an increase in fixed investment would not immediately lead to an increase in firms' demand for funds and for banks' lending. A different member said that recently there seemed to be movements leading to an increase in funds demand, although this was occurring only to a limited extent, and therefore, close monitoring continued to be necessary.

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

On the monetary policy stance for the immediate future, members agreed that, based on the assessment of the current economic and financial situation, it was appropriate to maintain the current guideline for money market operations with the target range of "around 30 to 35 trillion yen" for the outstanding balance of current accounts at the Bank.

One member said that Japan's economy continued to recover, and business sentiment and the economic outlook were improving as was reflected in developments such as the recent increase in business fixed investment. This member added that the downtrend in prices was slowing and expectation of price declines was abating. In this situation, it was important that the Bank firmly continue the current decisive monetary easing policy, thereby supporting the economic activity of the private sector from the financial side, in order to realize a situation where the inflation rate remained steadily positive.

In relation to the conduct of monetary policy in the future, a different member said that the price situation pursued was presented in various ways in different countries, and it was appropriate for Japan to seek the way that most suited it. This member said as a personal view that it would be meaningful for the Bank to present an inflation rate of, for example, 1 percent or above for the rate of increase in consumer prices with the upper limit at around 2 percent, as the rate it intended to realize.

Many members pointed out that unlike at the end of fiscal 2001 and 2002, there was hardly any concern in financial markets regarding availability of funds maturing beyond the end of fiscal 2003, and the financial system was stable. On this basis, members generally agreed that, for this fiscal year-end, it was not necessary to change the contingency clause in view of the approaching fiscal year-end, and it would be appropriate for the Governor to explain at the press conference after this meeting that the Bank would provide liquidity in accordance with the current contingency clause as necessary.

V. Remarks by Government Representatives

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

  1. (1) Japan's economy continued recovering steadily. In addition to the increase in business fixed investment and exports, private consumption was picking up. In this situation, the largest issue that the economy faced was overcoming the continued deflation and the government considered that the role of monetary policy remained vital.
  2. (2) In the past year, the Bank had been conducting monetary policy which put emphasis on actively influencing the expectations of market participants and the public by taking a series of additional monetary easing measures to overcome deflation and by further clarifying its policy stance of continuing the quantitative easing policy. The government welcomed these policy actions taken by the Bank as contributing greatly to financial market stability, which could be seen, for example, in low and stable medium- to long-term interest rates, and as enhancing the effectiveness of monetary policy. The government would like the Bank to deliberate further on the possibility of measures from the viewpoint of how the Bank could ensure the sustainability of the economic recovery.
  3. (3) The government would also like the Bank to conduct monetary policy flexibly, for example, dealing with developments in liquidity demand toward the end of the fiscal year in a swift and appropriate manner, by continuing to communicate closely with the government and giving due consideration to developments in the economy and financial markets, including developments in interest rates and exchange rates.

The representative from the Cabinet Office made the following remarks.

  1. (1) In the March issue of the Monthly Economic Report released on March 15, 2004, the government assessed the economy as follows: "The economy continues recovering steadily, supported by business investment and exports." The government considered that it was necessary to continue to monitor closely developments in financial markets, such as changes in exchange rates. As for price developments, the overall assessment was that moderate deflation was continuing.
  2. (2) The most important task for Japan's economy was to overcome deflation swiftly and achieve a self-sustained economic recovery led by domestic demand. To this end, the government released on March 11, 2004 the "Reform Work Schedule for Economic Revitalization," which presented a list of the fruits of structural reforms to date and measures to be taken. In order to overcome deflation while making policy efforts, such as acceleration and expansion of structural reforms, it was important to increase the supply of money through structural reforms by the government toward the creation of a more robust financial system and efforts by the Bank to strengthen the transmission mechanism of monetary policy.
  3. (3) In order to realize in the medium term the economic situation described in "Structural Reform and the Medium-Term Economic and Fiscal Perspectives-FY 2003 Revision," the government would like the Bank to examine the basic framework for the conduct of monetary policy and to implement more effective monetary policy, while paying due attention to developments in financial markets.

VI. Votes

Based on the above discussions, members considered that it was appropriate to maintain the current guideline for money market operations with the target for the outstanding balance of current accounts at the Bank at around 30 to 35 trillion yen.

To reflect this view, the chairman formulated the following proposal and put it to the vote.

The Chairman's Policy Proposal on the Guideline for Market Operations:

The guideline for money market operations in the intermeeting period ahead will be as follows, and will be made public by the attached statement (see Attachment 1).

The Bank of Japan will conduct money market operations, aiming at the outstanding balance of current accounts held at the Bank at around 30 to 35 trillion yen.

Should there be a risk of financial market instability, such as a surge in liquidity demand, the Bank will provide more liquidity irrespective of the above target.

Votes for the proposal: Mr. T. Fukui, Mr. T. Muto, Mr. K. Iwata, Mr. K. Ueda, Mr. T. Taya, Ms. M. Suda, Mr. S. Nakahara, Mr. H. Haru, and Mr. T. Fukuma.
Votes against the proposal: None.

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

Members discussed "The Bank's View" in the Monthly Report of Recent Economic and Financial Developments (consisting of "The Bank's View" and "The Background"), and put it to the vote.

The Policy Board approved, by unanimous vote, "The Bank's View" for publication on March 16, 2004, and decided to publish the whole report on March 17, 2004.8

  1. 8The English version of the whole report was published on March 18, 2004.

VIII. Approval of the Minutes of the Monetary Policy Meeting

The Policy Board approved unanimously the minutes of the Monetary Policy Meeting of February 4 and 5, 2004 for release on March 19, 2004.

IX. Approval of the Scheduled Dates of the Monetary Policy Meetings in April-September 2004

At the end of the meeting, the Policy Board approved the dates of the Monetary Policy Meetings to be held in the period April-September 2004, for immediate release (see Attachment 2).


Attachment 1
March 16, 2004
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:

The Bank of Japan will conduct money market operations, aiming at the outstanding balance of current accounts held at the Bank at around 30 to 35 trillion yen.

Should there be a risk of financial market instability, such as a surge in liquidity demand, the Bank will provide more liquidity irrespective of the above target.


Attachment 2
March 16, 2004
Bank of Japan

Scheduled Dates of Monetary Policy Meetings
in April-September 2004

table : Scheduled Dates of Monetary Policy Meetings in April-September 2004
  Date of MPM Publication of
Monthly Report
(The Bank's View)
Publication of
MPM Minutes
Apr. 20048 (Thur.), 9 (Fri.)9 (Fri.)May 25 (Tue.)
28 (Wed.)--June 18 (Fri.)
May19 (Wed.), 20 (Thur.)20 (Thur.) June 30 (Wed.)
June14 (Mon.), 15 (Tue.)15 (Tue.)July 16 (Fri.)
25 (Fri.)--Aug. 13 (Fri)
July12 (Mon.), 13 (Tue.)13 (Tue.)Aug. 13 (Fri.)
Aug.9 (Mon.), 10 (Tue.)10 (Tue.)Sep. 14 (Tue.)
Sep.8 (Wed.), 9 (Thur.)9 (Thur.)To be announced
  • Note: "The Bank's View" in the Monthly Report of Recent Economic and Financial Developments (Monthly Report) is scheduled to be published at 3:00 p.m. (this schedule is subject to change on certain grounds such as late closing of the meeting).
    Full text of the Monthly Report will be published at 2:00 p.m. on the next business day of the publication of "The Bank's View" (English translation will be published at 4:30 p.m. on the second business day of the publication of "The Bank's View").
    "The Bank's View" in the Outlook and Risk Assessment of the Economy and Prices (April 2004) will be published at 3:00 p.m. on Wednesday, April 28, 2004 (the whole report including the background will be published at 2:00 p.m. on Friday, April 30).