Monday, March 19, 2012

BIS - Yamaguchi, Yutaka, “Thinking behind Current Monetary Policy,”

Speech by Mr Yutaka Yamaguchi, Deputy Governor of the Bank of Japan, at the Japan National Press
Club, Tokyo, on 4 August 2000.

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"I am honored to be invited today to the Japan National Press Club. I once heard a joke that a central banker can deliver a speech to members of this esteemed Club, who are well known for their barrage of sharp questions, only when the economy is performing satisfactorily and he is confident enough to answer any questions. I am here today, not because this is the case, but because I think it is a good opportunity to elaborate on our thinking behind current monetary policy and ask for your comments. The main purpose of my remarks today is to present an overview of the zero interest rate policy by reviewing various discussions at past monetary policy meetings with respect to the termination of the zero interest rate policy..."

On the current monetary policy
17 July 2000, Bank of Japan

(1) At the Monetary Policy Meeting held today, the Bank of Japan decided to maintain its “zero interest rate policy”.

(2) The Policy Board views that Japan’s economy is recovering gradually, with corporate profits and business fixed investment continuing to increase. The Policy Board also judges that the economy is likely to recover gradually led mainly by business fixed investment, unless there are major adverse external shocks.

(3) With regard to the prices, the Policy Board views that the downward pressure on prices stemming from weak demand is declining significantly while an economic recovery is expected to continue moderately.

(4) Given the above considerations, the majority of the Policy Board views that Japan’s economy is coming to a stage where deflationary concerns are dispelled, which the Board have clearly stated as the condition for lifting the zero interest rate policy.

(5) At the Meeting, however, some views were expressed that before reaching a final decision to lift the zero interest rate policy, it was desirable to ensure the judgment on the firmness of economic conditions including employment and household income. Besides, it was pointed out that the Board needed to see how the commencement of reconstruction proceedings of Sogo Co. could affect market developments and business sentiments.

(6) Taking account of these factors, the Policy Board decided, by majority vote, on the maintenance of the zero interest rate policy.


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