Bank of Japan : Minutes of the Monetary Policy Meeting on December 16 and 17, 2021

Not to be released until 8:50 a.m.

Japan Standard Time on Friday,

January 21, 2022.

January 21, 2022

Bank of Japan

Minutes of the

Monetary Policy Meeting

on December 16 and 17, 2021

(English translation prepared by the Bank's staff based on the Japanese original)

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Secretariat of the Policy Board, Bank of Japan

P.O. Box 30, Nihonbashi, Tokyo 103-8660, Japan

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A Monetary Policy Meeting of the Bank of Japan Policy Board was held in the Head Office of the Bank of Japan in Tokyo on Thursday, December 16, 2021, from 2:00 p.m. to 3:50 p.m., and on Friday, December 17, from 9:00 a.m. to 11:50 a.m.1

Policy Board Members Present

Mr. KURODA Haruhiko, Chairman, Governor of the Bank of Japan Mr. AMAMIYA Masayoshi, Deputy Governor of the Bank of Japan Mr. WAKATABE Masazumi, Deputy Governor of the Bank of Japan Mr. SUZUKI Hitoshi

Mr. KATAOKA Goushi

Mr. ADACHI Seiji

Mr. NAKAMURA Toyoaki

Mr. NOGUCHI Asahi

Ms. NAKAGAWA Junko

Government Representatives Present

Mr. OIE Satoshi, State Minister of Finance, Ministry of Finance2

Mr. ONO Heihachiro, Deputy Vice-Minister for Policy Planning and Coordination, Ministry of Finance3

Mr. KIKAWADA Hitoshi, State Minister of Cabinet Office, Cabinet Office2 Mr. INOUE Hiroyuki, Vice-Minister for Policy Coordination, Cabinet Office3

Reporting Staff

Mr. UCHIDA Shinichi, Executive Director

Ms. SHIMIZU Tokiko, Executive Director (Assistant Governor)

Mr. KAIZUKA Masaaki, Executive Director

Mr. SHIMIZU Seiichi, Director-General, Monetary Affairs Department

1. The minutes of this meeting were approved by the Policy Board at the Monetary Policy Meeting held on January 17 and 18, 2022, as "a document describing an outline of the discussion at the meeting" stipulated in Article 20, paragraph 1 of the Bank of Japan Act of 1997. Those present are referred to by their titles at the time of the meeting.
2. Messrs. Oie and Kikawada were present on December 17.
3. Messrs. Ono and Inoue were present on December 16.

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Mr. KAWAMOTO Takuji, Head of Policy Planning Division, Monetary Affairs Department

Mr. OTANI Akira, Director-General, Financial Markets Department

Mr. KAMEDA Seisaku, Director-General, Research and Statistics Department

Mr. NAGANO Teppei, Head of Economic Research Division, Research and Statistics Department

Mr. HIROSHIMA Tetsuya, Director-General, International Department

Secretariat of the Monetary Policy Meeting

Mr. NAKAJIMA Takeshi, Director-General, Secretariat of the Policy Board

Mr. HONDA Hisashi, Director, Deputy Head of Planning and Coordination Division, Secretariat of the Policy Board

Mr. FUKUDA Eiji, Deputy Director-General, Monetary Affairs Department4

Mr. NAKASHIMA Motoharu, Head of Policy Infrastructure Division, Monetary Affairs Department4

Mr. HIGASHI Masato, Senior Economist, Monetary Affairs Department Mr. KADOGAWA Yoichi, Senior Economist, Monetary Affairs Department

4 Messrs. Fukuda and Nakashima were present on December 17 from 10:13 a.m. to 11:50 a.m.

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I. Summary of Staff Reports on Economic and Financial Developments5

A. Market Operations in the Intermeeting Period

In accordance with the short-term policy interest rate of minus 0.1 percent and the target level of the long-term interest rate, both of which were decided at the previous meeting on October 27 and 28, 2021, the Bank had been conducting purchases of Japanese government bonds (JGBs). 6 In this situation, 10-year JGB yields had been at around 0 percent, and the shape of the JGB yield curve had been consistent with the guideline for market operations.

With a view to supporting financing, mainly of firms, and maintaining stability in financial markets, the Bank had taken the following measures: purchases of CP and corporate bonds and conduct of the Special Funds-Supplying Operations to Facilitate Financing in Response to the Novel Coronavirus (COVID-19) (the Special Operations to Facilitate Financing), both under the Special Program to Support Financing in Response to the Novel Coronavirus (COVID-19) (the Special Program); flexible provision of ample funds, mainly through purchases of JGBs and conduct of the U.S. dollar funds-supplying operations; and purchases of exchange-traded funds (ETFs) and Japan real estate investment trusts (J-REITs) with upper limits of about 12 trillion yen and about 180 billion yen, respectively, on annual paces of increase in their amounts outstanding.

B. Recent Developments in Financial Markets

In the money market, interest rates on both overnight and term instruments generally had been in negative territory. With regard to interest rates on overnight instruments, the uncollateralized call rate and general collateral (GC) repo rates had declined, due partly to the Bank's purchases of Japanese government securities (JGSs) under repurchase agreements, after rising somewhat through the end of the reserve maintenance period for November. The respective rates had been in the range of around minus 0.01 to minus 0.05 percent and of around minus 0.05 to minus 0.10 percent. As for interest rates on term instruments, yields on three-month treasury discount bills (T-Bills) had been more or less flat.

1. Reports were made based on information available at the time of the meeting.
2. The target level of the long-term interest rate was as follows:

The Bank will purchase a necessary amount of JGBs without setting an upper limit so that 10-year JGB yields will remain at around zero percent.

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