Long-term interest rates were at around 1.5 percent, generally unchanged from the level at the time of the previous meeting, because Japanese stock prices had declined although long-term interest rates in the United States had risen.
One of these members said that there was an increasing risk of the economy deteriorating after the current lull, and thus the Bank should change its view of economic and financial developments for February decided at the previous meeting as it did not properly reflect the actual situation.
In relation to corporate financing, several comments were made on the effects of(1) the Bank's new measures for money market operations decided at the last meeting and(2) the government's credit guarantee system expanded on October 1.
With regard to economic indicators released after the previous meeting, the contracted value of public works for March had increased significantly from the previous month due to the concentration of supplementary budget implementation toward the fiscal year-end and the value for the January-March quarter of 2001 had also increased from the previous quarter.
We face the greatest challenge to the world economy in modern times; a crisis which has deepened since we last met, which affects the lives of women, men and children of every country, and which all countries must join together to resolve.
It is necessary to continue to pay close attention to the effects on financial markets of strengthening the framework for continuous powerful monetary easing decided at the previous meeting, as only about two months have passed including the summer slack period for market transactions.
Until the previous meeting, Ms. Shinotsuka's proposal had included the following sentence:"Regardless of the above target for the call rate, the Bank of Japan will provide more ample funds, if judged necessary, to maintain the stability of the financial markets.
One member pointed out that, as seen in generally stable stock prices and foreign exchange rates since the previous meeting, the measure to strengthen the framework, including the introduction of forward guidance for policy rates in July, was being accepted by market participants without causing major confusion.
One member expressed the view that monetary policy had already been eased to its limit as shown by the fact that the monetary easing decided at the previous meeting on February 12 had produced little effect on corporate financing--for example, it had not brought about a decline in lending rates.
Many members' view of the economic and financial situation was that(1) improvements in economic activities were observed but there had been no significant change to the economic outlook from the previous meeting, and(2) downward pressure on prices persisted.
Many members considered the rise in long-term interest rates and the appreciation of the yen from around the end of 1998 as risks to the economy. Due to such developments, one member revised downward slightly the member's judgment on the economy made at the previous meeting.
February 2016(Lima, Peru)Before opening, participants dedicated one minute silence for the victims of Kaohsiung Earthquake on February 6th, 2016, in Taiwan as well as those by the other natural disasters since the last EPWG meeting last year.
Developments in foreign exchange markets From the time of the previous meeting on September 9 through mid-September, the yen appreciated considerably against the U.S. dollar and the euro, surging to the 103 yen level against the former on the London market.
As mentioned earlier, many members considered that it was not necessary to change the basic judgment on the economic and financial situation made at the previous meeting, retaining the view that the Bank should carefully monitor the effect of the yen's appreciation on economic activities and prices.
A few members said that Japanese stock prices had declined toward the middle of August, but against the background of the continuing economic recovery, started to rise thereafter reflecting the rebound in U.S. stock prices, and were recently moving slightly above the level at the time of the previous meeting.
Some members expressed the recognition that downside risks concerning overseas economies-- such as the effects of the U.S.-China trade friction and developments in the Chinese economy, including the aforementioned effects-- remained significant, and that those risks had tilted to the downside compared with the previous meeting.
With regard to the Japanese government bond market, they commented that long-term interest rates had declined to around 1.5 percent reflecting more cautious views about the outlook for the economy, but had recently recovered to around the level at the time of the previous meeting.
Turning to U.S. and European financial markets, long-term interest rates in the United States increased slightly due partly to the release of stronger-than-expected economic indicators, while in European countries they continued to move at almost the same level as at the time of the previous meeting.
Japanese stock prices had risen slightly due to a fall in crude oil prices and a rise in U.S. stock prices. Recently, the Nikkei 225 Stock Average was moving at around 11,000 yen, slightly above the level at the time of the previous meeting.
The financial environment had been stable overall since the previous meeting, without any significant disruption around the fiscal year-end, despite negative factors such as the military action against Iraq and the weakness of Japanese stock prices, particularly bank stocks. However, developments in financial markets, the behavior of financial institutions, and the corporate financing situation continued to require close monitoring.
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