Monetary Policy Board Meeting Results
At the Monetary Policy Board meeting held on September 19, the Bank of Japan maintained by majority vote its previous policy of encouraging the uncollateralized overnight call rate to remain around 0.5%. Board members Takada and Tamura submitted proposals to raise the policy interest rate to around 0.75%, but these were rejected by majority vote. The bank also unanimously decided to sell its holdings of ETFs and J-REITs to the market.
Economic and Price Situation Assessment
Economic Conditions: Japan's economy is recovering gradually, although some areas show weakness. Looking ahead, overseas economies are expected to slow due to the impact of various countries' trade policies, which will weigh on Japanese corporate profits and cause the growth pace to decelerate.
Price Trends: The year-over-year rate of the consumer price index excluding fresh food is currently in the high 2% range, reflecting continued wage increases being passed through to selling prices and rising food prices including rice. The underlying inflation rate is expected to struggle initially due to the impact of slower growth pace, but subsequently gradually increase.
ETF and J-REIT Sale Policy
Sale Volume: ETFs will be sold at a pace of approximately 330 billion yen at book value annually, while J-REITs will be sold at approximately 5 billion yen at book value annually. This scale is equivalent to the stock sales from financial institutions completed in July this year.
Sale Period: If continued at the decided sale pace, both ETFs and J-REITs would require over 100 years for complete disposal based on simple calculations. Flexibility is ensured to temporarily adjust or suspend sale amounts according to market conditions.
Future Monetary Policy Management
Considering that current real interest rates are at extremely low levels, if economic and price outlooks are realized, the Bank will continue to raise policy interest rates and adjust the degree of monetary accommodation in accordance with improvements in economic and price conditions. However, given the continued high uncertainty surrounding the impact of various countries' trade policies, it is important to carefully monitor domestic and overseas economic and price developments and financial market movements, and make judgments without preconceptions.