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Minutes of the Monetary Policy Meeting

on December 15 and 16, 2005

(English translation prepared by the Bank's staff based on the Japanese original)

January 25, 2006
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, December 15, 2005, from 2:01 p.m. to 4:00 p.m., and on Friday, December 16, from 9:00 a.m. to 12:27 p.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
Ms. M. Suda
Mr. S. Nakahara
Mr. H. Haru
Mr. T. Fukuma
Mr. A. Mizuno
Mr. K. G. Nishimura

Government Representatives Present Mr. K. Akaba, Senior Vice Minister of Finance, Ministry of Finance2
Mr. K. Sugimoto, Deputy Vice Minister for Policy Planning and Coordination, Ministry of Finance3
Mr. Y. Nakajo, Vice Minister for Policy Coordination, 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. M. Ayuse, Deputy Director-General, Monetary Affairs Department4
Mr. S. Uchida, 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 Department5
Mr. A. Horii, Director-General, International Department

Secretariat of the Monetary Policy Meeting Mr. Y. Nakayama, Director-General, Secretariat of the Policy Board
Mr. T. Kozu, Adviser to the Governor, Secretariat of the Policy Board
Mr. K. Murakami, Director, Secretariat of the Policy Board
Mr. Y. Yamada, Director, Monetary Affairs Department4
Mr. K. Masaki, Senior Economist, Monetary Affairs Department
Mr. N. Takeda, Senior Economist, Monetary Affairs Department
Mr. K. Etoh, Deputy Director-General, Financial Markets Department4

  1. The minutes of this meeting were approved by the Policy Board at the Monetary Policy Meeting held on January 19 and 20, 2006 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. K. Akaba was present on December 16.
  3. Mr. K. Sugimoto was present on December 15.
  4. Messrs. M. Ayuse, Y. Yamada, and K. Etoh were present on December 16 from 9:00 a.m. to 9:19 a.m.
  5. Mr. K. Momma was present on December 16.

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 November 17 and 18, 2005.7 The outstanding balance of current accounts at the Bank moved in the 30-35 trillion yen range.

  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. When it is judged that liquidity demand is exceptionally weak considering such factors as responses of financial institutions to the Bank's funds-supplying operations, there may be cases where the balance of current accounts falls short of the target.

B. Recent Developments in Financial Markets

The weighted average of the uncollateralized overnight call rate was at around zero percent. As for interest rates on term instruments, both Euro-yen rates and yields on treasury bills (TBs) and financing bills (FBs) were stable at low levels.

Japanese stock prices rose, reflecting announcements of business performance by Japanese firms and the rise in U.S. stock prices. The Nikkei 225 Stock Average was recently moving in the range of 15,000-15,500 yen.

Long-term interest rates decreased against the background of a fall in U.S. interest rates, but increased thereafter reflecting stronger-than-expected Japanese economic indicators and the rise in stock prices. They were recently moving in the range of 1.50-1.55 percent.

The yen depreciated to the 120-121 yen range against the U.S. dollar reflecting stronger-than-expected U.S. economic indicators and prospects of a wider interest rate differential between Japan and the United States, but appreciated thereafter partly because the yen was bought back by some foreign investors. It was recently being traded in the range of 116-120 yen to the dollar. From a longer-term perspective, the yen was on a depreciating trend against a wide range of currencies such as the dollar, euro, and those of Asian economies.

C. Overseas Economic and Financial Developments

The U.S. economy continued to expand. Household spending and business fixed investment continued to increase steadily and the employment situation had been improving. Although prices had recorded a high increase temporarily due to the rise in energy prices, the inflation rate was increasing moderately in terms of the basic trend.

In the euro area, although the economy remained somewhat sluggish, the momentum for recovery was gradually increasing as evidenced by the pickup in exports and production partly due to depreciation of the euro.

With regard to East Asian economies, in China both domestic and external demand continued to expand strongly. The NIEs and ASEAN economies continued to expand at a moderate pace on the whole, although negative effects of high energy prices could be seen in, for example, household spending in some economies.

In U.S. and European financial markets, long-term interest rates showed relatively large fluctuations reflecting market participants' outlook for the conduct of monetary policy and their response to economic indicators. Stock prices rose, partly reflecting the halt in the rise in crude oil prices and strong corporate profits. In financial markets in many emerging economies, their currencies and stock prices rose.

D. Economic and Financial Developments in Japan

1. Economic developments

Exports continued to increase against the background of the expansion of overseas economies. Exports to the United States and East Asia continued to increase, and the rise in those to the European Union was gradually becoming noticeable. Exports were expected to continue rising against the background of the further expansion of overseas economies.

In the corporate sector, business fixed investment had continued to increase against the background of high corporate profits. According to the December Tankan (Short-Term Economic Survey of Enterprises in Japan), current profits remained at high levels regardless of the type of industry and size of firm. Business sentiment had continued to improve moderately regardless of the type of industry and size of firm, although firms were still tending to be somewhat cautious relative to their profits. Business fixed investment plans had been revised upward at a wide range of firms, and business fixed investment was expected to increase for firms as a whole for the third consecutive year. The perception among firms of having excess labor and capital stock had dissipated.

Production had been on an uptrend with some fluctuations. Industrial production increased, mainly in electronic parts and devices and general machinery, in terms of the figure for October compared with the monthly average for the July-September quarter. Production was expected to continue its uptrend, as overseas economies would continue to grow and the recovery in domestic demand was solid.

Inventories had been relatively high in materials industries. However, high-value-added products for IT-related goods and automobile-related goods remained in a favorable supply-demand condition, and thus the effects of inventory adjustments in materials industries seemed to be limited.

As for the employment and income situation, household income had been rising moderately, reflecting improvements in employment and wages. Somewhat positive developments in the labor force participation rate had been observed, as the employment situation had continued to improve. Household income was likely to continue increasing gradually, since the perception among firms of having excess labor had dissipated and corporate profits were likely to remain high.

Private consumption had been steady. While the number of new passenger-car registrations had been weak since July, sales of electrical appliances had continued a steady increase. As for services consumption, sales in the food service industry had continued to be steady. Indicators for consumer confidence were at high levels on the whole. Private consumption was likely to continue recovering steadily against the background of a gradual increase in household income.

Domestic corporate goods prices had continued to increase, mainly reflecting the rise in international commodity prices and the depreciation of the yen. They were expected to continue increasing for the time being. On the basis of corporate goods prices including imported goods, by stages of demand, the year-on-year rate of change in final goods prices had turned positive, and it was expected to affect consumer prices in the course of time. The year-on-year rate of change in consumer prices (excluding fresh food, on a nationwide basis), which had been slightly negative until then, was 0.0 percent in October. It was projected to turn slightly positive as supply-demand conditions continued improving gradually and the effects from the reduction in telephone charges dissipated.

2. Financial environment

The environment for corporate finance was becoming more accommodative on the whole. The lending attitude of private banks was becoming more accommodative, and that of financial institutions as perceived by firms had also been improving. Under these circumstances, lending by private banks had become higher than the previous year's level.

The issuing environment for CP and corporate bonds was favorable, and the amount outstanding of CP and corporate bonds issued had been above the previous year's level.

The year-on-year growth rate of the monetary base was at the 1.0-2.0 percent level, and that of the money stock (M2+CDs) had been around 2.0 percent.

II. The Expiry of Temporary Measures, Including the Purchases of Asset-Backed Securities

A. Staff Proposal

The staff proposed that the Bank announce that it would let temporary measures relating to the purchases of asset-backed securities and the relaxing of eligibility standards for accepting asset-backed CP in its market operations expire at the end of March 2006, as scheduled, and that it would also take a necessary transitional measure.

B. Discussion by the Policy Board and Vote

Members voted unanimously to approve the proposal. A few members said that they would like the staff to continue to support relevant parties in their efforts to foster the development of credit markets.

III. 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 steadily, with domestic and external demand well balanced and the recovery spreading to a wide range of sectors.

Members agreed that overseas economies, particularly those of the United States and East Asia, continued to expand, and were likely to keep expanding.

On the U.S. economy, members concurred that it was expanding solidly. Household spending and business fixed investment continued to increase steadily, and in this situation employment, as well as production, had returned to an improving trend. A few members expressed the view that Christmas sales seemed to have started off with higher growth than in 2004. Some members said that developments in housing prices and their effects on the economy continued to warrant attention, even though there seemed to be no signs at present that there would be a rapid adjustment of housing prices. One member pointed out that the pace of increase in housing prices was slowing and the number of houses purchased was almost flat, and commented that housing demand could become sluggish as the effects of the rise in interest rates permeated in the future.

With regard to East Asian economies, members agreed that both domestic and external demand continued to expand strongly in China, and the NIEs and ASEAN economies continued to expand at a moderate pace. One member noted that production capacity was being expanded in China, and thus whether this could cause excess supply in the future warranted attention.

Some members commented on risk factors for the global economy that developments in the high crude oil prices continued to warrant attention. One member said that monetary authorities were raising interest rates in view of a global heightening of inflationary pressure, and the effects on the global economy should be monitored carefully.

Regarding Japan's economy, members agreed that exports continued to increase reflecting the expansion of overseas economies, and were likely to continue to rise.

Members concurred that domestic private demand continued to be firm as structural adjustment pressures, such as excess debt, had almost dissipated.

With regard to developments in the corporate sector, members agreed that business fixed investment had continued to increase and was likely to keep increasing, as domestic and external demand continued to increase and corporate profits remained high. Many members said that business fixed investment seemed likely to continue to increase, given that in the December Tankan business fixed investment plans for fiscal 2005 had been revised upward at a wide range of firms, including nonmanufacturing and small firms, and the perception among firms of having excess production capacity had dissipated.

Members concurred that positive developments in the corporate sector were spreading steadily to the household sector.

As for the employment and income situation, members agreed that the number of employees and wages had been increasing, and household income had continued to rise moderately. Some members pointed out that, in addition to the year-on-year increase in regular payments, growth in winter bonus payments seemed to have exceeded that in summer bonus payments according to survey results and other sources. A few members referred to the possibility of wage increases being agreed on in negotiations in spring 2006, particularly at firms with strong business performance. If they were realized, prices could be affected through further weakening of downward pressure on unit labor costs. One member said that firms were increasingly perceiving themselves as short of labor as evidenced by, for example, the diffusion index for employment conditions and the number of new graduates firms planned to recruit in the December Tankan, and it was becoming clearer that there was a new movement from reducing the number of employees to investing in human resources.

Members agreed that private consumption had been steady, and it was likely to continue to expand steadily against the background of the improvement in the employment and income situation. One member commented that, although the number of new passenger-car registrations had been weak since July 2005, sales of electrical appliances were favorable and services consumption was on an increasing trend. Some members pointed out that sales of expensive automobiles were relatively good and sales of luxury goods, such as jewelry, were favorable, and commented that these developments might be partly due to wealth effects from the rise in stock prices. A few other members expressed the view that, although attention should be paid to the impact of tax reforms to be implemented in the future, consumption was likely to remain steady for the time being, as positive developments in the corporate sector were spreading steadily to the household sector through, for example, the rise in wages.

Some members said that housing investment was likely to remain firm. One member commented that attention should be paid to the risk that recent favorable developments in housing investment might be affected if the impact of the scandal of falsification of earthquake-resistance data for building construction spread in Japan.

Members agreed that production had basically continued on a moderate increasing trend, and would continue its uptrend. A few members commented that inventory adjustments, which had continued until recently, had generally been completed as indicated by the balance between shipments and inventories in the industrial sector as a whole.

On prices, members agreed that domestic corporate goods prices had continued to increase, mainly reflecting the rise in international commodity prices and the depreciation of the yen, and were expected to continue increasing. They also concurred that as the year-on-year rate of change in consumer prices (excluding fresh food, on a nationwide basis), which had been slightly negative until then, was 0.0 percent in October, it would turn slightly positive mainly because the effects of the reduction in telephone charges were expected to dissipate in a situation where supply and demand conditions continued improving gradually in line with economic recovery.

Regarding price developments in the medium to long term, a few members commented that prices would remain on a rising trend despite short-term fluctuations given that the output gap was improving, wages were increasing, and people's expectations for prices were improving. One member said that the output gap might not narrow as much as expected if the economy's potential growth rate was increasing recently. In response to this, a different member argued that an increase in productivity would not necessarily exert downward pressure on prices because it could boost demand through improvement in households' and firms' expectations for income in the long term.

B. Financial Developments

On the financial front, members concurred that the financial environment remained extremely accommodative. Some members expressed the view that the financial environment was effectively becoming accommodative to an even greater extent as evidenced by a decline in real interest rates, the rise in stock prices, and the depreciation of the yen, in a situation where the environment influencing economic activity and prices had been improving.

Many members expressed the view that recent developments in stock and foreign exchange markets reflected domestic investors' increased risk-taking capacity and inclination to take risks as well as market participants' speculation regarding interest rate differentials between Japan and overseas economies in a situation where the economy was recovering. One of these members pointed out that, if market participants expected too strongly that extremely low interest rates would be prolonged, the possibility of destabilization of price formation in foreign exchange markets and other financial markets could not be ruled out. A different member pointed out that investors' perception of risks in the stock market was becoming optimistic to some extent. A few members expressed the view that the recent rise in stock prices basically reflected the upward revision of corporate profits and did not indicate that an asset price bubble was emerging. A different member who supported this view added, however, that even with stable general prices, if the extremely accommodative financial environment continued to be maintained while the momentum of the economy strengthened, this could trigger a surge in asset prices. This member said that attention should therefore be paid to the risk that, if this situation materialized, investments lacking in balance between risk and return would increase, triggering overheating of the economy and a reaction thereafter.

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

On the monetary policy stance for the immediate future, members agreed that it was appropriate to maintain the current framework of the quantitative easing policy in accordance with the Bank's commitment.

A few members expressed the view that it would be appropriate to lower the target range for the outstanding balance of current accounts at the Bank at this point mainly for the following reasons. First, financial institutions' demand for liquidity required for funds management was on a declining trend. And second, the Bank should encourage formation of interest rates based on the market mechanism as much as possible to ensure smooth termination of the quantitative easing policy in the future. Against this view, the majority of members said that it was appropriate to maintain the current guideline for money market operations, including the proviso.

Members discussed matters relating to communication concerning the conduct of monetary policy. A few members commented that although there had been various speculations and views regarding the timing of a change of the monetary policy framework and the conduct of monetary policy after the change, the Bank's basic thinking was as explained in the October Outlook for Economic Activity and Prices, and the Bank should clearly explain this thinking, as well as conduct monetary policy appropriately based on a careful analysis of economic activity and prices. In relation to this, one member commented that the Bank should continue to explain clearly that termination of the quantitative easing policy would not imply an abrupt change in the economy so that this was fully understood not only by market participants but also the corporate sector and the public. Some members expressed the view that the future path of the policy interest rate would depend on developments in economic activity and prices, but market participants might nevertheless be increasingly expecting that the extremely accommodative monetary policy would be prolonged regardless of the situation.

Members discussed how various price indicators should be considered in relation to the conduct of monetary policy. Some members said that it was appropriate for the Bank to conduct monetary policy taking into account price indexes that covered goods and services purchased by consumers. This was because indicators used to measure the degree of price stability should be easily understandable by the public and also the sound development of the national economy implied improvement in the economic welfare of individual citizens eventually. With regard to whether the Bank should use the headline consumer price index (CPI) or the core CPI, which excluded temporary factors, in assessing consumer price developments, one member noted that exclusion of factors causing temporary fluctuations made it easier to grasp the underlying trend, but at the same time, it made it difficult to assess overall developments if the weight of the core CPI was too small relative to the headline CPI. Many members said that although whether to exclude energy prices could be an issue from the viewpoint of eliminating temporary fluctuations, it was not appropriate to exclude them because the recent rise in energy prices had been largely caused by an increase in the demand of emerging economies and thus was not necessarily a temporary factor. One member said that in cases where the Bank examined the GDP deflator, it should take into account that it might be revised frequently and substantially with revisions of GDP statistics.

One member expressed the view that the Bank should consider indicating a desirable rate of inflation, from the viewpoint of providing an anchor for economic agents' expectations regarding future developments in economic activity and prices and contributing to stable formation of expectations in financial markets. Against this view, one member said that inflation targeting was aimed at achieving the announced inflation target in the medium to long term, and adoption of inflation targeting without the public fully understanding it could impair the flexibility of monetary policy. This member also said that if the target was set at a high level it could cause a rise in long-term interest rates via an increase in the expected inflation rate or risk premiums. A different member said that the type of inflation targeting varied significantly among countries that had introduced it, and thus it was necessary to take into account the situation in Japan when considering a framework for enhancing the Bank's monetary policy transparency. A few members expressed the view that, since the economy was still in the process of moving toward sustainable growth with price stability and the mechanism behind economic developments and price formation was changing, it was difficult at this point to determine and announce a desirable rate of inflation for the medium to long term.

V. Remarks by Government Representatives

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

  1. (1) Japan's economy continued to recover at a moderate pace led by private demand, as seen, for example, in the recently released second preliminary estimates of GDP statistics for the July-September quarter, which showed increases in private consumption and business fixed investment. In terms of the price situation, however, deflation persisted.
  2. (2) Ensuring the sustainability of the economic recovery and overcoming deflation were the most important policy tasks the government should tackle together with the Bank. To ensure the achievement of these policy tasks, the government would like the Bank to carry out in its conduct of monetary policy a careful and comprehensive assessment of economic activity and prices, including risk factors such as crude oil prices, with close monitoring of developments in financial markets and overall interest rates.
  3. (3) The government considered that, in the current situation where deflation persisted, it was necessary to continue firmly with policy efforts to overcome it. Therefore, the government would like the Bank to carefully explain to market participants and the public that it would firmly continue with the current quantitative easing policy.

The representative from the Cabinet Office made the following remarks.

  1. (1) Japan's economy was recovering at a moderate pace. However, deflation persisted and overcoming it continued to be an important policy task the government should tackle together with the Bank.
  2. (2) The government would release its "Economic Outlook for FY 2006 and Basic Economic and Fiscal Management Measures" on December 19, 2005. The government expected that in fiscal 2006 the economy would continue its moderate recovery led mainly by private demand and the likelihood of overcoming deflation would increase through policy efforts together with the Bank.
  3. (3) In assessing the state of deflation, a comprehensive analysis of price developments based not only on consumer prices but also on the GDP deflator would be necessary. The government would like the Bank to give due consideration mainly to the effects of the rise in crude oil prices in relation to the mechanism of price formation, other special factors, and statistical bias, and carefully assess the current situation of and outlook for consumer prices, which were the basis for the necessary conditions for terminating the quantitative easing policy.
  4. (4) The government hoped that the Bank would implement effective monetary policy to overcome deflation in fiscal 2006 that would be consistent with the government's outlook for the economy. Furthermore, the government would like the Bank to consider presenting a desirable price level and the future path, including the Bank's thinking about the course in reaching that level, in order to promote proper formation of expectations in financial markets, and thereby contribute to sustainable economic growth with price stability and the overcoming of deflation.

VI. Votes

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

Two members, however, said that they would like to propose that the Bank should lower the target for the outstanding balance of current accounts at the Bank from "around 30 to 35 trillion yen" to "around 27 to 32 trillion yen."

As a result, the following proposal was submitted and put to the vote.

Mr. T. Fukuma and Mr. A. Mizuno proposed the following guideline for money market operations for the intermeeting period ahead:

The Bank of Japan will conduct money market operations, aiming at the outstanding balance of current accounts held at the Bank at around 27 to 32 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. When it is judged that liquidity demand is exceptionally weak considering such factors as responses of financial institutions to the Bank's funds-supplying operations, there may be cases where the balance of current accounts falls short of the target.

The proposal was defeated by majority vote.

Votes for the proposal: Mr. T. Fukuma and Mr. A. Mizuno.
Votes against the proposal: Mr. T. Fukui, Mr. T. Muto, Mr. K. Iwata, Ms. M. Suda, Mr. S. Nakahara, Mr. H. Haru, and Mr. K. G. Nishimura.

To reflect the majority view, the chairman formulated the following proposal.

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

The guideline for money market operations for 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. When it is judged that liquidity demand is exceptionally weak considering such factors as responses of financial institutions to the Bank's funds-supplying operations, there may be cases where the balance of current accounts falls short of the target.

Votes for the proposal: Mr. T. Fukui, Mr. T. Muto, Mr. K. Iwata, Ms. M. Suda, Mr. S. Nakahara, Mr. H. Haru, and Mr. K. G. Nishimura.

Votes against the proposal: Mr. T. Fukuma and Mr. A. Mizuno.

Mr. T. Fukuma dissented from the above proposal, arguing that the Bank should lower the target range for the outstanding balance of current accounts at the Bank gradually in a step-by-step manner, while carefully examining economic and financial developments, as long as the maintenance of the current framework of the quantitative easing policy would not be hindered, for the following three reasons. First, the Bank should encourage formation of interest rates based on the market mechanism as much as possible to restore the proper functioning of the market. Second, the Bank should shorten maturities of funds-supplying operations to enhance the timeliness and flexibility of its conduct of monetary policy. And third, it was possible to support sustainable economic recovery with price stability by maintaining the zero interest rate environment based on the Bank's commitment in terms of policy duration.

Mr. A. Mizuno dissented from the proposal for the following reasons. First, to ensure financial market stability in the period around the termination of the quantitative easing policy, it would be appropriate to start lowering the outstanding balance in line with developments in the market, rather than lowering it intensively over a short period of time. Second, to minimize the possible shocks from the termination of the policy, the Bank should create an environment where it could communicate with market participants via interest rates. Third, delaying the lowering of the target range for the outstanding balance of current accounts might increase the criticism that this was one factor that could cause acceleration in the depreciation of the yen and global asset inflation. And fourth, lowering the target range could be expected to send a signal to financial markets that the Policy Board would change the policy framework appropriately based on its own decision.

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 decided, by unanimous vote, the text of "The Bank's View." It was confirmed that "The Bank's View" would be published on December 16, 2005 and the whole report on December 19, 2005.8

  1. 8The English version of the whole report was published on December 20, 2005.

VIII. Approval of the Minutes of the Monetary Policy Meetings

The Policy Board approved unanimously the minutes of the Monetary Policy Meetings of October 31, 2005 and November 17 and 18 for release on December 21, 2005.

IX. Approval of the Scheduled Dates of the Monetary Policy Meetings in January-June 2006

At the end of the meeting, the Policy Board approved the dates of the Monetary Policy Meetings to be held in the period January-June 2006, for immediate release (see Attachment 2).


Attachment 1

December 16, 2005
Bank of Japan

At the Monetary Policy Meeting held today, the Bank of Japan decided, by 7-2 majority 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. When it is judged that liquidity demand is exceptionally weak considering such factors as responses of financial institutions to the Bank's funds-supplying operations, there may be cases where the balance of current accounts falls short of the target.


Attachment 2

December 16, 2005
Bank of Japan

Scheduled Dates of Monetary Policy Meetings in January-June 2006

Table : Scheduled Dates of Monetary Policy Meetings in January-June 2006

Date of MPM Publication of
Monthly Report
(The Bank's View)
Publication of
MPM Minutes
Jan. 2006 19 (Thur.), 20 (Fri.) 20 (Fri.) Mar. 14 (Tue.)
Feb. 8 (Wed.), 9 (Thur.) 9 (Thur.) Mar. 14 (Tue.)
Mar. 8 (Wed.), 9 (Thur.) 9 (Thur.) Apr. 14 (Fri.)
Apr. 10 (Mon.), 11 (Tue.) 11 (Tue.) May 24 (Wed.)
28 (Fri.) -- June 20 (Tue.)
May 18 (Thur.), 19 (Fri.) 19 (Fri.) June 20 (Tue.)
June 14 (Wed.), 15 (Thur.) 15 (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 for Economic Activity and Prices (April 2006) will be published at 3:00 p.m. on Friday, April 28, 2006 (the whole report including the background will be published at 2:00 p.m. on Monday, May 1).