Bank of Japan Policy Board: No Further Changes in Stance

December 22, 2010

After meeting on Monday and Tuesday for a combined six hours and forty minutes, the Policy Board released a statement yesterday that by a 9-0 vote

  • Reaffirmed an target range of zero to 0.1% for the uncollateralized overnight call rate.
  • Announced that a program to buy 35 trillion yen of various financial assets and longer-term funds has indeed begun.
  • Published a schedule of policy meetings in 2011, the first five of which are set for January 24-25, February 14-15, March 14-15, April 6-7, and April 28.

The Bank of Japan followed Tuesday’s announced policies with its monthly economic assessment released today.  The assessment believes a recovery remains intact but concedes that lately “it seems to be pausing.”  Officials go on to observe that “production has recently declined slightly and business sentiment has also been somewhat weak.”  Exports are “more or less flat,” and consumer “demand for some goods has suffered a reverse.”  Public investment “is declining,” but the “degree of severity has eased somewhat” in employment and income.  The rate of core CPI deflation has been declining.  A return to moderately-paced recovery is projected but highly contingent upon better foreign demand, and this will help reestablish a better price trend.

The overnight call rate has been averaging 0.09%, closer to 0.1% than 0.0%.  Although bank lending is below year-ago levels, central bank officials maintain that the “financial positions of firms have been improving” because of stronger corporate bond issuance and a diminished decline in the amount of outstanding commercial paper.

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.



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