Minutes of the
Monetary Policy Meeting
on November 15 and 16, 2006
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 their assessment of the economic and financial situation, it was appropriate to maintain the current guideline for money market operations that the Bank would encourage the uncollateralized overnight call rate to remain at around 0.25 percent.
Some members noted that formation of interest rates in the money market had
been stable, and expressed the view that this was against the backdrop of not only the Bank's flexible conduct of money market operations but also the increased efficiency and smoothness of funds transactions that had been achieved as market participants had become accustomed to trading in the current financial environment. A few of these members added that, as the restoration of the proper functioning of the money market progressed, market interest rates would be likely to reflect factors such as market participants' view of Japan's economy better, and this would contribute to more constructive communication of the Bank with market participants.
Regarding the future path of monetary policy, members agreed that they would
continue to carefully assess economic activity and prices, and that if developments in economic activity and prices were likely to follow the Bank's projection presented in the October Outlook Report, it would be appropriate to conduct monetary policy in line with the thinking described in it that the Bank would adjust the level of the policy interest rate
gradually in the light of developments in economic activity and prices.
One member said that, if it was confirmed with greater certainty at a future meeting that developments in economic activity and prices were following the Bank's projection presented in the October Outlook Report, the Bank should not hesitate to consider a policy change.
With regard to the fact that the timing of a possible policy change was increasingly attracting the attention of the public, including market participants, members agreed that the Bank should explain carefully that the timing of any policy change depended entirely on developments in economic activity and prices as it should not be thought that the timing
was predetermined. Some members said that a divergence had emerged between market participants and the Bank on the view of the economic situation due partly to the release of some sluggish economic indicators. These members noted that the Bank should, in the process of assessing economic activity and prices, examine the divergence carefully, and that it should communicate with market participants more closely. A few members commented that it was important that the Bank utilize the new framework for the conduct of monetary policy introduced in March 2006 in communicating with the market, and that the Bank should make efforts to promote deeper understanding of the new framework among the public, including market participants.
(이상)
Monetary Policy Meeting
on November 15 and 16, 2006
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 their assessment of the economic and financial situation, it was appropriate to maintain the current guideline for money market operations that the Bank would encourage the uncollateralized overnight call rate to remain at around 0.25 percent.
Some members noted that formation of interest rates in the money market had
been stable, and expressed the view that this was against the backdrop of not only the Bank's flexible conduct of money market operations but also the increased efficiency and smoothness of funds transactions that had been achieved as market participants had become accustomed to trading in the current financial environment. A few of these members added that, as the restoration of the proper functioning of the money market progressed, market interest rates would be likely to reflect factors such as market participants' view of Japan's economy better, and this would contribute to more constructive communication of the Bank with market participants.
Regarding the future path of monetary policy, members agreed that they would
continue to carefully assess economic activity and prices, and that if developments in economic activity and prices were likely to follow the Bank's projection presented in the October Outlook Report, it would be appropriate to conduct monetary policy in line with the thinking described in it that the Bank would adjust the level of the policy interest rate
gradually in the light of developments in economic activity and prices.
One member said that, if it was confirmed with greater certainty at a future meeting that developments in economic activity and prices were following the Bank's projection presented in the October Outlook Report, the Bank should not hesitate to consider a policy change.
With regard to the fact that the timing of a possible policy change was increasingly attracting the attention of the public, including market participants, members agreed that the Bank should explain carefully that the timing of any policy change depended entirely on developments in economic activity and prices as it should not be thought that the timing
was predetermined. Some members said that a divergence had emerged between market participants and the Bank on the view of the economic situation due partly to the release of some sluggish economic indicators. These members noted that the Bank should, in the process of assessing economic activity and prices, examine the divergence carefully, and that it should communicate with market participants more closely. A few members commented that it was important that the Bank utilize the new framework for the conduct of monetary policy introduced in March 2006 in communicating with the market, and that the Bank should make efforts to promote deeper understanding of the new framework among the public, including market participants.
(이상)
