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Minutes of the Monetary Policy Meeting

on October 12 and 13, 2004
(English translation prepared by the Bank's staff based on the Japanese original)

November 24, 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 Tuesday, October 12, 2004, from 2:00 p.m. to 3:51 p.m., and on Wednesday, October 13, from 9:00 a.m. to 11:56 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. I. Ueda, Senior Vice Minister of Finance, Ministry of Finance2
Mr. M. Ishii, Deputy Vice Minister for Policy Planning and Coordination, Ministry of Finance3
Mr. J. Hamano, Director General for Economic and Fiscal Management, Cabinet Office
Reporting Staff Mr. E. Hirano, Executive Director (Assistant Governor)
Mr. M. Shirakawa, Executive Director
Mr. A. Yamamoto, Executive Director
Mr. H. Yamaguchi, Director-General, Monetary Affairs Department
Mr. Y. Maehara, Adviser to the Governor, Monetary Affairs Department
Mr. S. Uchida, Senior Economist, Monetary Affairs Department
Mr. H. Yamaoka, Senior Economist, Monetary Affairs Department
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 Board
Mr. K. Murakami, Director, Secretariat of the Policy Board
Mr. T. Kato, Senior Economist, Monetary Affairs Department
Mr. K. Kamiyama, Senior Economist, Monetary Affairs Department

  1. The minutes of this meeting were approved by the Policy Board at the Monetary Policy Meeting held on November 17 and 18, 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. Mr. I. Ueda was present on October 13.
  3. Mr. M. Ishii was present on October 12.

I. Summary of Staff Reports on Economic and Financial Developments4

A. Money Market Operations in the Intermeeting Period

The Bank conducted market operations in accordance with the guideline decided at the previous meeting on September 8 and 9, 2004.5 The outstanding balance of current accounts at the Bank moved at around 32-35 trillion yen, including September 30, the day of semiannual book closings.

B. Recent Developments in Financial Markets

Against the background of the Bank's provision of ample liquidity, the weighted average of the uncollateralized overnight call rate was generally 0.001 percent, and on September 30 it was 0.005 percent. Interest rates on term instruments had been steady at low levels.

Japanese stock prices had fallen through late September, due to weaker-than-expected domestic economic indicators and to a fall in U.S. stock prices mainly reflecting the rise in crude oil prices. They started to climb thereafter, however, reflecting a rebound in U.S. stock prices and the results of the September Tankan (Short-Term Economic Survey of Enterprises in Japan). The Nikkei 225 Stock Average was recently moving in the range of 11,000-11,500 yen, around the same level as at the time of the previous meeting.

Long-term interest rates had dropped temporarily to close to 1.4 percent, reflecting more cautious views about the economic recovery, but rose somewhat thereafter following the rebound in Japanese stock prices and the results of the September Tankan. They were recently moving in the range of 1.45-1.50 percent.

In foreign exchange markets, selling of the yen against some currencies, for example the euro, had slightly predominated over buying through the beginning of October, reflecting the surge in crude oil prices since late September. The U.S. dollar depreciated thereafter due to weaker-than-expected U.S. employment statistics and the yen was in the range of 109-110 yen to the dollar, the same level as just before the previous meeting.

C. Overseas Economic and Financial Developments

The U.S. economy continued to expand supported by domestic private demand components such as household spending and business fixed investment. However, some indicators, such as the number of employees and new orders for capital goods, suggested a slowdown in the pace of economic expansion. The U.S. economy was likely to continue expanding for a while, but future developments required close monitoring, given the continuing high crude oil prices.

In the euro area, the economy continued to recover. Business confidence, however, had stopped improving temporarily partly because the pace of increase in exports had slowed somewhat.

As for East Asian economies, in China, both domestic and external demand continued to expand strongly. The year-on-year rate of increase in the year-to-date total of fixed asset investment remained at high levels despite the measures taken by public authorities to contain the overheating of the Chinese economy. The NIEs and ASEAN economies continued to expand, but the pace of growth in exports and production, particularly of IT-related goods, was slowing recently. Consumer prices were on a rising trend in many East Asian economies, including China, partly reflecting their economic expansion and the rise in crude oil prices.

In U.S. and European financial markets, both stock prices and long-term interest rates had declined somewhat recently due partly to the rise in crude oil prices.

In financial markets in many emerging economies, stock prices remained firm and the yield differentials between their sovereign bonds and U.S. Treasuries continued to narrow.

D. Economic and Financial Developments in Japan

1. Economic developments

Exports continued to increase with the expansion of overseas economies, albeit at a slightly slower pace recently. Exports to the United States had been growing steadily until the April-June quarter, but decreased in the July-August period, particularly those of automobile-related goods and consumer goods such as digital appliances. Exports to East Asia increased only slightly as in the April-June quarter. Among exports to East Asia, deceleration in the pace of increase in those to China seemed to have been due partly to measures taken by public authorities to contain the overheating of the Chinese economy.

Business fixed investment continued to increase. Shipments of capital goods (excluding transport equipment) continued to increase firmly in the July-August period as in the April-June quarter. Looking at the environment surrounding business fixed investment in the September Tankan, corporate profits continued to increase and business sentiment continued to improve steadily. Business fixed investment plans for fiscal 2004 were revised steadily upward, especially those of small firms. Machinery orders (private demand, excluding shipbuilding and orders from electric power companies), a leading indicator of business fixed investment, dropped in the July-August period in reaction to the surge in the April-June quarter. On the other hand, construction starts (floor area, private, nondwelling use), another leading indicator, had recently been on a clear uptrend.

As for the employment and income situation, indicators reflecting labor market conditions such as job offers and the unemployment rate had been on an improving trend, albeit with some fluctuations. The number of employees was on an uptrend. With regard to wages, regular payments were still on a downtrend in terms of the average per person, mainly due to the rise in the proportion of part-time workers, but the rate of decline had been diminishing gradually. As a result, the decline in household income was coming to a halt according to the Monthly Labour Survey.

Private consumption continued to show some positive movements. Indicators of consumer sentiment continued to be on a recovery trend on the whole.

Production in the April-June quarter showed an increase of 2.6 percent quarter on quarter, but was almost flat in the July-August period. Moreover, it was expected to remain almost flat on a quarter-on-quarter basis in the July-September quarter. Inventories remained more or less flat as a whole. While inventories of electronic parts increased, those of producer goods, excluding electronic parts, and construction goods decreased. The chart of the inventory cycle showed hardly any change since the January-March quarter. Many expected that inventories of electronic parts would need to be adjusted only slightly. This was because the market for digital appliances was projected to continue growing and manufacturers were slowing their pace of production at an earlier stage. Nevertheless, developments in inventory adjustment of electronic parts required close monitoring since the degree and duration of adjustment depended on factors such as year-end sales at home and abroad.

On the price front, domestic corporate goods prices continued to rise due to the strengthening of commodity prices at home and abroad and to the improvement in supply and demand conditions. Consumer prices (excluding fresh food) had been declining slightly on a year-on-year basis. The year-on-year rate of decline in consumer prices (on a nationwide basis) was 0.2 percent in August as in July. As for the outlook, the rise in prices of petroleum-related products such as gasoline, which was due to the rise in crude oil prices in the July-August period, was projected to push consumer prices upward. On the other hand, rice prices were projected to start declining on a year-on-year basis from October. Consumer prices as a whole were therefore projected to continue falling slightly on a year-on-year basis.

2. Financial environment

While firms continued to reduce their debts, the pace of decline in credit demand in the private sector was becoming somewhat moderate, since corporate activity had been recovering, as seen in the ongoing increase in business fixed investment. The lending attitude of private banks was becoming more accommodative, and the year-on-year rate of decline in lending by private banks had basically been diminishing. The lending attitude of financial institutions as perceived by firms, including small firms, had also been more accommodative.

With regard to financing through capital markets, the issuing environment for CP and corporate bonds continued to be favorable, as seen in low and stable credit spreads. As a result, the amount outstanding of CP and corporate bonds issued continued to be above the previous year's level.

The year-on-year growth rate of the monetary base had been at the 4.0-5.0 percent level, with the continuing low growth of banknotes in circulation compared with some time ago mainly due to decreasing anxieties about the financial system. The year-on-year growth rate of the money stock (M2+CDs) was around 2.0 percent.

  1. 4Reports were made based on information available at the time of the meeting.
  2. 5The 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. Summary of Discussions by the Policy Board on Economic and Financial Developments

A. Economic Developments

On the current state of Japan's economy, members agreed that it continued to recover, although the deceleration in the growth of exports continued to affect production and other aspects of the economy, noting the following factors. First, improvements in business sentiment were seen in a broad range of industries, including the materials and machinery industries, in the September Tankan, and this confirmed that a virtuous cycle continued to operate in the economy. And second, indicators of private consumption continued to show positive movements, and indicators of consumer sentiment also continued to improve. Regarding the outlook, members agreed that Japan's economy would continue to recover, gathering stronger momentum.

Members agreed that overseas economies overall, while decelerating from their high growth so far toward a more sustainable rate of growth, would continue to expand steadily.

Members agreed that the U.S. economy continued to expand, although at a slower pace. A few members noted that deceleration in the pace of growth in final demand components such as private consumption was less than expected, although the economy was growing more slowly compared with some time ago, as seen in somewhat weak employment statistics for September. Regarding this point, many members commented that pessimistic views about the U.S. economy that had been observed some time ago in the financial markets seemed to have subsided. A few members said that it was still necessary to pay attention to the effects of the high crude oil prices, although the recent deceleration in the economy was smaller than expected. One member said that it was necessary to pay attention to developments in interest rates and foreign exchange rates and their effects on economic and financial developments, both within and outside the United States.

Members agreed that East Asian economies continued to expand as a whole. They noted that growth in economies such as those of South Korea and Taiwan had decelerated somewhat compared with some time ago due to the fall in exports and production of IT-related goods, but in China both domestic and external demand continued to be on a strong expanding trend. Some members said that the pace of growth in fixed asset investment in China remained at a high level, and it was still necessary to evaluate whether measures based on administrative guidance to contain overheating of investment would be sufficiently effective or some macroeconomic policy measures would be implemented. One member said that the fact that the effects of the high crude oil prices on Asian economies were not so evident was probably attributable to some extent to price controls, which were probably causing the fiscal deficit of the governments concerned to expand due to increases in subsidies.

Members agreed that European economies continued to recover, but the pace of recovery remained weak.

Members agreed that Japan's exports were likely to be on an increasing trend. A few members said that the fact that the recent deceleration in exports was not so great was probably attributable to exports to oil producing countries whose real purchasing power was increasing as a result of the rise in crude oil prices. A different member said that the growth in exports of iron and steel, which continued to be produced at full capacity, was likely to decelerate in terms of volume because domestic demand for both was increasing further.

With regard to domestic demand, many members referred to the further upward revision of business fixed investment plans for fiscal 2004 in the September Tankan, and said that the growth in business fixed investment was strengthening, spreading to a wider range of industries and firms of various sizes. A few members expressed the view that an increasing number of firms seemed to be starting to take an aggressive management stance by for example, making fixed investment to expand production capacity. As for the outlook, members concurred that business fixed investment would continue to increase. One member commented that machinery orders, which had continued to show high growth so far, were recently weakening, and said that there was some doubt about the sustainability of the growth in business fixed investment. A few members including this member expressed the view, however, that business fixed investment could be expected to continue increasing, as the increase in business fixed investment had started to spread to nonmanufacturers. For example, real estate transactions were increasing after a substantial fall in land prices, and construction starts were rising substantially. One of these members said that if these developments were an indication of a full-fledged increase in the construction cycle, business fixed investment seemed likely to continue to grow for a somewhat long time.

Many members expressed the view that the index of industrial production for the July-September quarter would be more or less flat temporarily, but the October-December quarter would show an increase again reflecting the recovery in domestic and external demand. On this basis, members generally agreed that production remained on a rising trend. One member said that although the slowdown in global IT-related demand was affecting exports and production, production in other industries, particularly materials, remained strong, and therefore production as a whole had been on an increasing trend. In relation to this point, another member pointed out that production in many materials-related industries was unlikely to increase substantially in the near future, because their capacity utilization rate was already close to the maximum level. A different member commented that the possibility could not be ruled out that activity in the corporate sector as a whole, including nonmanufacturers, had entered a lull.

Members concurred that private consumption continued to show some positive movements. Some members pointed to a recovery trend in consumer confidence as an underpinning factor for such movements. One member expressed the view that further significant improvements in consumer confidence might be unlikely, since all the factors that could make a major contribution were already reflected in it.

With regard to the employment and income situation, members concurred that the decline in household income was coming to a halt, as the number of employees was on an uptrend and wages had almost stopped falling, with a continuing improvement in various indicators reflecting labor market conditions such as job offers, the unemployment rate, and the diffusion index for employment conditions in the Tankan survey. One member said that positive effects of the increase in corporate profits on household income would become clearer in the near future, and at some point positive movements in private consumption would be supported by an increase in household income. Another member expressed the view that regular payments in terms of the average per person were likely to start to increase in the near future, since the pace of increase in the proportion of part-time workers was slowing recently. A different member said that it was difficult at present to judge that the pace of increase in the proportion of part-time workers was slowing.

Members discussed developments in crude oil prices and their effects on economic activity, which was one of the points that required monitoring in relation to the future course of domestic and overseas economies. In relation to the background to the recent surge in crude oil prices, a few members explained that, in addition to the demand-side factor of the economic expansion worldwide, there was concern about whether a sufficient amount of energy could be supplied to accommodate that expansion due to factors such as the effects of hurricanes in the United States. Some members expressed the view that the direct impact of the rise in crude oil prices on economic activity and prices in Japan would be relatively small for the following reasons. First, Japan's energy efficiency had improved, and accordingly the amount of crude oil consumed to produce a unit of real GDP had declined significantly compared with the time of the first oil crisis. And second, the share of light oil, such as West Texas Intermediate (WTI) and North Sea Brent, whose prices had been soaring recently, in the overall quantity of crude oil imported by Japan was not large, and thus crude oil prices on a customs-cleared basis had not increased substantially. Many members said, however, that if crude oil prices increased further, there could be downside risks to overseas economies in the future due to factors such as a decline in real purchasing power and in corporate profits, especially in countries that consumed a large amount of energy. Therefore, it was necessary to continue to watch for possible indirect effects stemming from such developments. One member expressed the view that the risk of a further rise in crude oil prices was not negligible given the strong demand for it and other primary commodities. A different member said that when there was concern that economic activity would have to undergo adjustments, foreign exchange rates could fluctuate greatly. From this and other viewpoints, future developments in crude oil prices required close monitoring. Another member noted that consumer prices, even the core index, in East Asian economies were rising slightly as a result of the rise in crude oil prices being passed on downstream, and said that this was cause for concern in the near future.

With regard to developments in IT-related goods, some members said that growth in global demand for IT-related goods was recently decelerating slightly, but demand itself was unlikely to decline substantially because demand was increasing for a wider range of products, such as digital appliances and electronic parts for automobiles. With regard to recent inventory adjustments of IT-related goods in Japan, many members said that inventories would need to be adjusted only slightly for the time being partly because adjustments had started at an earlier stage. In relation to this point, one member added that market participants' view of the outlook for developments in IT-related goods had improved somewhat compared with some time ago, as seen in the recovery in the U.S. Nasdaq composite index. A few members said, however, that there could be a risk that the adjustments would be unexpectedly significant since developments in IT-related goods were difficult to forecast, and therefore future developments, such as Christmas sales, warranted careful monitoring.

Members agreed that there was no significant change in the underlying trend of prices. They said that domestic corporate goods prices had been rising due to the strengthening of commodity prices at home and abroad and to the improvement in supply and demand conditions, while consumer prices had been declining slightly. Many members raised the following factors as background to the fact that consumer prices had not started rising. First, there was still some slack in supply and demand conditions, although they were gradually improving. Second, the increase in prices of materials was being absorbed by the corporate sector with the decline in unit labor cost. And third, the pricing power of firms remained weak. Regarding the outlook for consumer prices, members agreed that, overall, they were likely to continue falling slightly on a year-on-year basis. This was because, although the rise in prices of gasoline would push up consumer prices for a while, rice prices were expected to push them down year on year. One member said that it was becoming possible that the output gap posted positive figures depending on the method of measurement and it could not necessarily be said that supply and demand conditions would continue to be slack. A few members said that attention should continue to be paid to whether there were changes in firms' price-setting stance, given that the rise in materials prices was being passed on in intermediate goods prices amid the continuing economic recovery.

B. Financial Developments

On the financial front, members agreed that there was no major change in developments in the Japanese financial markets as a whole. Some members commented on developments in stock prices and long-term interest rates in the intermeeting period.

One member said that stock prices and long-term interest rates had showed ups and downs reflecting changes in market views about future developments in domestic and overseas economies due to factors such as developments in crude oil prices and the results of the September Tankan. The member added that developments in the stock and bond markets continued to lack clear direction on the whole.

A few members said that stock prices worldwide had been relatively firm despite some negative factors, such as the surge in crude oil prices. A different member expressed the view that the worldwide monetary easing was probably supporting stock and commodity prices.

III. 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.

In relation to money market operations for the immediate future, a few members presented their assessment that the financial markets had been extremely stable, as evident in the fact that for the first time since the quantitative easing policy had been introduced the contingency clause of the guideline for money market operations had not been implemented at the time of semiannual book closings. One of these members pointed out that in such a situation, financial institutions' demand for current account deposits tended to decline, so that it was not always easy to achieve the target for the outstanding balance of current accounts at the Bank, and said that the Bank should continue to conduct money market operations in a deliberate manner. Another member said that, in the current situation where anxieties about the financial system were decreasing, it was necessary to conduct market operations from the viewpoint of not hindering a recovery in the functioning of the financial markets, in addition to achieving the current target range for the outstanding balance of current accounts. In response to this view, a different member commented that it was very hard for the Bank to achieve the target range and at the same time not hinder a recovery in the functioning of the financial markets. Another member said that it was necessary to continue to carefully monitor developments in the financial markets at least until the full removal of blanket deposit insurance.

A few members noted that market participants were again focusing on the Policy Board members' forecasts of consumer prices for fiscal 2005, which would be presented in the upcoming Outlook for Economic Activity and Prices. These members said that, since market participants might overreact to the forecasts, it was important that the Bank continue to closely monitor market developments and present its assessment of economic activity and prices and its thinking on the conduct of monetary policy clearly to market participants.

One member expressed the view that since the current framework, in which the main operating target for money market operations was the outstanding balance of current accounts, would be shifted at some point in the future, the Bank would need to discuss thoroughly how it would carry out the shift in the monetary policy framework.

IV. Remarks by Government Representatives

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

  1. (1) The Japanese economy was recovering at a solid pace as seen in developments such as improvements in business sentiment in the September Tankan. However, attention should continue to be paid to the effects of developments in crude oil prices on both the domestic and overseas economies and to the course of the world economy.
  2. (2) The surge in crude oil prices in particular had also been discussed at the recent G-7 meeting as a risk factor for the world economy. The G-7 countries had agreed on various points such as that they would call on oil producers to provide adequate supplies to ensure that prices moderated, and that it was important consumer nations increase energy efficiency.
  3. (3) As deflation persisted, the government would like the Bank to continue to make clear its stance of firmly maintaining the quantitative easing policy. In a situation where public attention was increasingly focused on the future conduct of monetary policy, the government would also like the Bank to conduct monetary policy flexibly, as prescribed in the current guideline for money market operations, should there be a risk of financial market instability, giving due consideration to developments in financial markets.
  4. (4) As the representative of the Ministry of Finance had said in the previous meetings, the government would like the Bank to deliberate what kind of new measures it could take to maintain market expectations that the accommodative financial environment would continue and to ensure the sustainability of the economic recovery.

The representative from the Cabinet Office made the following remarks.

  1. (1) The Japanese economy was recovering at a solid pace. On the other hand, attention should be paid to the effects on both the domestic and overseas economies of developments in crude oil prices and to developments in the world economy, among other factors. The price situation overall could be assessed as being still only halfway to overcoming deflation. The most important task for Japan's economy was therefore to overcome deflation swiftly and achieve sustainable growth led by private demand.
  2. (2) To this end, the government would pursue early implementation of "Basic Policies for Economic and Fiscal Management and Structural Reform 2004." In order to carry out structural reforms comprehensively and swiftly, the government would clarify at the meetings of the Council on Economic and Fiscal Policy the scenario for reforms such as the following: the privatization of Japan Post; the reform of the social security system; the reform package relating to three issues (reform of state subsidies, transfer of tax resources from the central to local governments, and reform of local allocation tax); integrated review of revenue and expenditure; and measures to realize sustainable growth of the economy.
  3. (3) The Bank was determined to firmly maintain the quantitative easing policy. In overcoming deflation, it was essential that the money stock increase in the end, and the government would like the Bank to implement more effective monetary policy, including measures that would lead to more effective provision of liquidity, continuing to communicate closely with the government. Public attention was focused on developments in interest rates as the Japanese economy had been recovering at a solid pace. The government would therefore like the Bank, through deliberations based on its expertise, to make further efforts to enhance the transparency of the conduct of monetary policy by, for example, presenting a path toward overcoming deflation.

V. 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).

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.

VI. 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 decided, by unanimous vote, the text of "The Bank's View." It was confirmed that "The Bank's View" would be published on October 13, 2004 and the whole report on October 14, 2004.6

  1. 6The English version of the whole report was published on October 15, 2004.

VII. Approval of the Minutes of the Monetary Policy Meeting

The Policy Board approved unanimously the minutes of the Monetary Policy Meeting of September 8 and 9, 2004 for release on October 18, 2004.


Attachment
October 13, 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.