Nevertheless, a few members noted that, even if price declines were due to individual factors, people's inflation expectations might fall through the adaptive formation mechanism of inflation expectations and affect the underlying trend in prices, depending on how wide the declines would spread across items.
A few members said that, in addition to these weak fundamentals of Japan's economy, supply-demand factors indigenous to Japan, such as unwinding of cross-shareholdings and selling of stocks by corporate pension funds, which were returning funds entrusted to them in order to discontinue acting on behalf of public pension funds, were exerting downward pressure on stock prices.
Meanwhile, a few members noted that attention needed to be paid to the possibility that the effects of the expansionary fiscal measures, which had underpinned the economy to date, would gradually dissipate from around the second half of this year.
A few members said that, given that long-term interest rates in Japan were recently moving more closely with those overseas, particularly those in the United States, the effects of a rise in U.S. long-term interest rates on Japanese long-term interest rates would require monitoring.
A few members commented that, as developments in profits of financial institutions had a cumulative impact on their financial strength, attention should be paid to the effects of the prolonged low-yield environment on financial institutions' profits and the functioning of financial intermediation.
A few members pointed out that industrial production was increasing for the fourth consecutive month, particularly in IT-related sectors, and said that recovery in production, which had been lagging behind the recovery in the demand side, had become clear.
A few members said that in this situation producer prices were rising for a wide range of items, and thus future movements in the inflation rate and developments affecting it, including firms' attempts to pass through higher costs, should be closely monitored.
A few members, on the other hand, noted that, since the results of some surveys suggested that small firms' profits were deteriorating, attention should continue to be paid to whether the increase in business fixed investment, including that of small firms, would continue in and after fiscal 2005.
As for prices, a few members said that domestic wholesale prices were almost flat reflecting the improvement in the supply-demand balance in the manufacturing sector at home and abroad, in addition to the depreciation of the yen and the rise in crude oil prices in the past.
A few members, however, pointed out that business fixed investment plans of nonmanufacturers, particularly of small firms, remained cautious, and it was therefore necessary to closely monitor the extent to which the effects of economic recovery were spreading to nonmanufacturers, although movements toward recovery were spreading in the economy.
A few members expressed the recognition that, although such developments as a weakening in production stemming from the tightening of gas emission regulations on automobiles had been observed, domestic demand such as business fixed investment and private consumption remained more or less firm.
A few members expressed the view that, in addition to investment aimed at saving labor and at streamlining business processes to deal with the labor shortage, investment related to information and communications technology-- such as for AI-- as well as that aimed mainly at increasing production capacity-- such as expanding factories-- had started to increase.
On this basis, a few members expressed the view that, although exports were likely to maintain their moderate growth for the time being, uncertainties over future developments such as the effects of the trade friction between the United States and China had heightened.
A few members expressed the recognition that IT-related exports were likely to pick up firmly, on the back of an expansion in demand for data centers and motor vehicles, although their growth had decelerated temporarily since the turn of the year due to global production adjustments for semiconductors.
Meanwhile, a few members expressed the recognition that structural problems associated with demographic changes and technological innovation-- which would have an impact on financial institutions' business environment-- and the effects of monetary easing should be analyzed and discussed independently of each other.
A few members expressed the recognition that the global adjustments in the manufacturing sector continued as the Global Purchasing Managers' Index(PMI) for manufacturing had declined below 50 in May and the world trade volume had not yet recovered.
A few members expressed the recognition that the likelihood of the firm growth in overseas economies being sustained was increasing, as suggested by the fact that international organizations and central banks recently had been revising their economic growth forecasts upward for major countries and regions.
A few members expressed the view that although some indicators, for example, shipments of capital goods, were not strong, the Financial Statements Statistics of Corporations by Industry, Quarterly and some indicators to be released in the near future could confirm that the rising trend in business fixed investment was firm.
A few members expressed the view that production in Germany had been sluggish, due particularly to the effects of the tightening of gas emission regulations on automobiles, but domestic demand such as business fixed investment and private consumption remained more or less firm.
A few members, however, said that the possibility that further tightening measures might become necessary could not be ruled out as the economic growth might not slow sufficiently, given that commodity prices, such as those of steel and nonferrous metals, and shipping charges were rising again, and that the growth in production and fixed asset investment remained high.
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