Bank of Japan : Minutes of the Monetary Policy Meeting on March 18 and 19, 2021

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

Japan Standard Time on Thursday,

May 6, 2021.

May 6, 2021

Bank of Japan

Minutes of the

Monetary Policy Meeting

on March 18 and 19, 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, March 18, 2021, from 2:00 p.m. to 3:46 p.m., and on Friday, March 19, from 9:00 a.m. to 12:32 p.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. SAKURAI Makoto

Ms. MASAI Takako

Mr. SUZUKI Hitoshi

Mr. KATAOKA Goushi

Mr. ADACHI Seiji

Mr. NAKAMURA Toyoaki

Government Representatives Present

Mr. NAKANISHI Kenji, State Minister of Finance, Ministry of Finance2

Mr. SHINKAWA Hirotsugu, Deputy Vice-Minister for Policy Planning and Coordination, Ministry of Finance3

Mr. AKAZAWA Ryosei, State Minister of Cabinet Office, Cabinet Office2 Mr. TAWA Hiroshi, Vice-Minister for Policy Coordination, Cabinet Office3

Reporting Staff

Mr. UCHIDA Shinichi, Executive Director

Mr. YAMADA Yasuhiro, Executive Director4

Ms. SHIMIZU Tokiko, Executive Director (Assistant Governor)

1. The minutes of this meeting were approved by the Policy Board at the Monetary Policy Meeting held on April 26 and 27, 2021, 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. Nakanishi and Akazawa were present on March 19.
3. Messrs. Shinkawa and Tawa were present on March 18.
4. Messrs. Yamada and Masaki were present on March 18 from 3:17 p.m. to 3:43 p.m.

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Mr. KAIZUKA Masaaki, Executive Director

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

Mr. IIJIMA Kota, Head of Policy Planning Division, Monetary Affairs Department

Mr. MASAKI Kazuhiro, Director-General, Financial System and Bank Examination Department4

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

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

Mr. KAWAMOTO Takuji, Head of Economic Research Division, Research and Statistics Department

Mr. FUKUMOTO Tomoyuki, 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 Department5

Mr. YANO Masayasu, Head of Policy Infrastructure Division, Monetary Affairs Department5

Mr. HIGASHI Masato, Senior Economist, Monetary Affairs Department Mr. TSUCHIKAWA Akira, Senior Economist, Monetary Affairs Department Mr. NAGAE Shinichiro, Senior Economist, Monetary Affairs Department5

5 Messrs. Fukuda, Yano, and Nagae were present on March 19.

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I. Summary of Staff Reports on Economic and Financial Developments6

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 January 20 and 21, 2021, the Bank had been conducting purchases of Japanese government bonds (JGBs).7 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.

The Bank had conducted purchases of CP and corporate bonds and the Special Funds-Supplying Operations to Facilitate Financing in Response to the Novel Coronavirus (COVID-19) to support financing, mainly of firms, under the Special Program to Support Financing in Response to the Novel Coronavirus (COVID-19). In addition, with a view to maintaining stability in financial markets, the Bank had provided ample funds flexibly, mainly through purchases of JGBs and the conduct of the U.S. dollar funds-supplying operations, and had actively purchased exchange-traded funds (ETFs) and Japan real estate investment trusts (J-REITs).

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 had been in the range of around minus 0.01 to minus 0.02 percent; general collateral (GC) repo rates had been in the range of around minus 0.06 to minus 0.09 percent. As for interest rates on term instruments, yields on three-month treasury discount bills (T-Bills) had been more or less flat.

The Nikkei 225 Stock Average had risen, mainly on the back of heightened expectations for a global economic recovery that reflected, for example, additional economic measures in the United States and progress with the vaccine rollout. Long-term interest rates had been at around 0 percent under yield curve control. As for liquidity in the JGB market, a comparison of the February 2021 Bond Market Survey with the November 2020 survey

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. While doing so, the yields may move upward and downward to some extent mainly depending on developments in economic activity and prices.

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