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April 10, 2012
Bank of Japan
Statement on Monetary Policy
1. At the Monetary Policy Meeting held today, the Policy Board of the Bank of Japan decided,
by a unanimous vote,
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to set the following guideline for money market operations for the
intermeeting period:
The Bank of Japan will encourage the uncollateralized overnight call rate to remain at around
0 to 0.1 percent.
2. Overseas economies on the whole still have not emerged from a deceleration phase but U.S.
economic conditions have continued to improve moderately and the sluggish European
economy has stopped deteriorating. Global financial markets have generally been stable.
3. Japan's economic activity has shown some signs of picking up, although it has remained more
or less flat. Exports have so far remained more or less flat. As for domestic demand,
business fixed investment has been on a moderate increasing trend aided by the restoration of
disaster-stricken facilities. Private consumption has firmed up due in part to the effects of
measures to stimulate demand for automobiles, and housing investment has generally been
picking up. Public investment has recently turned to an increase. Reflecting these
developments in demand at home and abroad, production has shown some signs of picking
up, although it has remained more or less flat. In these circumstances, business sentiment
has been more or less unchanged on the whole, with continued improvement in domestic
demand-oriented sectors and lingering cautiousness in export-oriented ones. Meanwhile,
financial conditions in Japan have continued to ease. On the price front, the year-on-year
rate of change in the CPI (all items less fresh food) is around 0 percent.
4. As for the outlook, Japan's economy is expected to return to a moderate recovery path as the
pace of recovery in overseas economies picks up, led by emerging and commodity-exporting
economies, and as reconstruction-related demand after the earthquake disaster gradually
strengthens. The year-on-year rate of change in the CPI is expected to remain at around 0
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Voting for the action: Mr. M. Shirakawa, Mr. H. Yamaguchi, Mr. K. G. Nishimura, Mr. R. Miyao, Mr. Y.
Morimoto, Ms. S. Shirai, and Mr. K. Ishida.
Voting against the action: None. 2
percent for the time being.
5. Regarding risks to the economic outlook, there remains a high degree of uncertainty about the
global economy, including the prospects for the European debt problem, developments in
international commodity prices, and the likelihood of emerging and commodity-exporting
economies simultaneously achieving price stability and economic growth. Regarding risks
to the price outlook, careful attention should be paid to future developments in international
commodity prices and in medium- to long-term inflation expectations.
6. The Bank recognizes that Japan's economy faces the critical challenge of overcoming
deflation and returning to a sustainable growth path with price stability. The goal of
overcoming deflation will be achieved both through efforts to strengthen the economy's
growth potential and support from the financial side. With this in mind, the Bank will
pursue powerful monetary easing, and will support private financial institutions in their
efforts to strengthen the foundations for Japan's economic growth via the fund-provisioning
measure to support strengthening the foundations for economic growth. At today's meeting,
as shown in the Attachment, the Bank established detailed rules for a new U.S. dollar lending
arrangement equivalent to 1 trillion yen, of which a preliminary outline was released at the
previous meeting in March. 3
Attachment
A New U.S. Dollar Lending Arrangement
Established as part of the "Fund-Provisioning Measure to Support Strengthening
the Foundations for Economic Growth"
1. Eligible Investments and Loans
Investments and loans denominated in foreign currencies, made for a period of no less
than one year, and which should support strengthening the foundations for Japan's
economic growth
-- Each counterparty shall submit to the Bank a plan for relevant investments and loans,
which will be checked by the Bank.
-- With regard to the investments and loans used overseas, they should contribute to
strengthening the foundations for Japan's economic growth, for example, through the
following effects.
(1) An increase in the production of goods and services, business fixed investment, or
employment in Japan
(2) The promotion of an international division of labor to enhance domestic economic
activities; for example, by shifting more resources to the areas of business
planning and research and development, the launch of new businesses, and
boosting capacity for business continuity
(3) Stable procurement of raw materials consumed in Japan
2. Eligible Counterparties
Of the eligible counterparties for the "Fund-Provisioning Measure to Support
Strengthening the Foundations for Economic Growth," those having accounts at the
FRBNY and those entrusting the settlement of U.S. dollars to financial institutions that
have accounts at the FRBNY
3. Form of Loans 4
U.S. dollar loans against collateral
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4. Duration of Loans
The duration of each loan shall be one year. Loans may be rolled over up to three
times and, consequently, the maximum duration of loans could be effectively four years.
5. Loan Rates
6-month U.S. dollar LIBOR (London InterBank Offered Rate)
Loan rates shall be renewed every six months.
6. Total Amount of Loans
12 billion U.S. dollars
-- Loans are made using the U.S. dollar reserves already held by the Bank.
-- New loans are scheduled to be disbursed quarterly. The total amount of loans at
each disbursement is scheduled to be about 2 billion U.S. dollars.
7. Maximum Amount of Loans per Counterparty
The total amount outstanding of loans to each counterparty shall not exceed 1 billion
U.S. dollars. The maximum amount to be lent to each counterparty at each loan
disbursement shall be the amount outstanding of investments and loans carried out by
each counterparty from April 2012.
8. Deadline for Applications for New Loans
March 31, 2014
The last disbursement of new loans shall take place by June 30, 2014.
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Pooled collateral pledged by the counterparty for various transactions with the Bank (Reference)
Meeting hours:
April 9 : 14:00-16:08
April 10 : 8:59-12:04
Policy Board members present:
Masaaki Shirakawa (Governor)
Hirohide Yamaguchi (Deputy Governor)
Kiyohiko G. Nishimura (Deputy Governor)
Ryuzo Miyao
Yoshihisa Morimoto
Sayuri Shirai
Koji Ishida
(Others present)
April 9
From the Ministry of Finance:
Shinichi Sato, Deputy Vice Minister for Policy Planning and Co-ordination
(14:00-16:08)
From the Cabinet Office:
Kenji Matsuyama, Vice-Minister for Policy Coordination (14:00-16:08)
April 10
From the Ministry of Finance:
Yukihisa Fujita, Senior Vice Minister of Finance (8:59-11:53,11:57-12:04)
From the Cabinet Office:
Katsuyuki Ishida, Senior Vice Minister for Cabinet Office (8:59-11:53,11:57-12:04)
Release of the Monthly Report of Recent Economic and Financial Developments:
14:00 on Wednesday, April 11 (Japanese)
16:30 on Thursday, April 12 (English)
-- The English translation of the summary of the Monthly Report will be
released at 14:00 on Wednesday, April 11
Release of the minutes:
8:50 on Monday, May 7