Minutes of the
Monetary Policy Meeting
on May 16 and 17, 2007
(중략)
III. Summary of Discussions on Monetary Policy for the Immediate Future On the guideline for money market operations for the intermeeting period ahead, 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 0.5 percent. They also concurred that their basic thinking remained unchanged on the
monetary policy stance for the immediate future: while confirming that Japan's economy remained likely to follow a path of sustainable growth under price stability in light of the "understanding of medium- to long-term price stability" and assessing relevant risk factors, the Bank would adjust the level of interest rates gradually in accordance with improvements
in the economic and price situation.
Members discussed the Bank's communication of its thinking concerning the conduct of monetary policy. Referring to the stability in financial markets after the release of the April Outlook Report, some members expressed the view that the Bank
communicated well, in a way that was consistent with the Bank's communication in the past, to market participants its outlook for economic activity and prices through fiscal 2008 and its basic thinking on the future conduct of monetary policy.
With regard to the Bank's future conduct of monetary policy, some members said that market participants remained keenly interested in the following points: what specific indicators the Bank would use to assess the degree of improvement in the economic and price situation; and how the Bank would conduct monetary policy in view of the fact that consumer prices had recently remained sluggish. In relation to this, many members expressed the view that the Bank should promote deeper understanding among market participants of its conduct of forward-looking monetary policy. One of these members added that it was important to assess developments in individual economic and price indicators from the viewpoint of whether they changed (1) the probability of the standard scenario materializing and (2) the risk scenario. A different member said that it was essential that the Bank continue to clearly explain the following basic points regarding the conduct of monetary policy.
First, the effects of monetary policy took considerable time to
work through the economy and the volatility of output might ctually be amplified when attempts were made to absorb every short-term change in prices resulting from various shocks. Second, the Bank should therefore forecast developments in economic activity and prices from a sufficiently long-term viewpoint and strive to realize price stability over the medium to long term. And third, it was important to achieve sustained economic growth without large fluctuations by adjusting the level of interest rates in a gradual manner.
One member expressed the opinion that, since it was natural that the Bank had no predetermined time schedule of policy changes, emphasizing this point might only give market participants the impression that the Bank's conduct of monetary policy was difficult
to understand. Against this opinion, some members said that one of the points about which the Bank had taken particular care when deciding on the wording of the April Outlook Report was that the timing of any policy change depended on developments in economic activity and prices. Based on this, these members stressed that the Bank should continue to explain this point carefully to ensure better understanding among market participants.
After the above discussion, members agreed that it was important to explain at every opportunity its thinking about the conduct of forward-looking monetary policy, and continue to clearly explain its assessment of both current and future developments in economic activity and prices.
(하략)
Monetary Policy Meeting
on May 16 and 17, 2007
(중략)
III. Summary of Discussions on Monetary Policy for the Immediate Future On the guideline for money market operations for the intermeeting period ahead, 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 0.5 percent. They also concurred that their basic thinking remained unchanged on the
monetary policy stance for the immediate future: while confirming that Japan's economy remained likely to follow a path of sustainable growth under price stability in light of the "understanding of medium- to long-term price stability" and assessing relevant risk factors, the Bank would adjust the level of interest rates gradually in accordance with improvements
in the economic and price situation.
Members discussed the Bank's communication of its thinking concerning the conduct of monetary policy. Referring to the stability in financial markets after the release of the April Outlook Report, some members expressed the view that the Bank
communicated well, in a way that was consistent with the Bank's communication in the past, to market participants its outlook for economic activity and prices through fiscal 2008 and its basic thinking on the future conduct of monetary policy.
With regard to the Bank's future conduct of monetary policy, some members said that market participants remained keenly interested in the following points: what specific indicators the Bank would use to assess the degree of improvement in the economic and price situation; and how the Bank would conduct monetary policy in view of the fact that consumer prices had recently remained sluggish. In relation to this, many members expressed the view that the Bank should promote deeper understanding among market participants of its conduct of forward-looking monetary policy. One of these members added that it was important to assess developments in individual economic and price indicators from the viewpoint of whether they changed (1) the probability of the standard scenario materializing and (2) the risk scenario. A different member said that it was essential that the Bank continue to clearly explain the following basic points regarding the conduct of monetary policy.
First, the effects of monetary policy took considerable time to
work through the economy and the volatility of output might ctually be amplified when attempts were made to absorb every short-term change in prices resulting from various shocks. Second, the Bank should therefore forecast developments in economic activity and prices from a sufficiently long-term viewpoint and strive to realize price stability over the medium to long term. And third, it was important to achieve sustained economic growth without large fluctuations by adjusting the level of interest rates in a gradual manner.
One member expressed the opinion that, since it was natural that the Bank had no predetermined time schedule of policy changes, emphasizing this point might only give market participants the impression that the Bank's conduct of monetary policy was difficult
to understand. Against this opinion, some members said that one of the points about which the Bank had taken particular care when deciding on the wording of the April Outlook Report was that the timing of any policy change depended on developments in economic activity and prices. Based on this, these members stressed that the Bank should continue to explain this point carefully to ensure better understanding among market participants.
After the above discussion, members agreed that it was important to explain at every opportunity its thinking about the conduct of forward-looking monetary policy, and continue to clearly explain its assessment of both current and future developments in economic activity and prices.
(하략)
