On its Monetary Policy Meeting held on May 17, 2007, the Bank of Japan decided, by a unanimous vote, to keep the uncollateralized overnight call rate at 0.5 percent
On the current state of Japan's economy, members concurred that it continued to expand moderately, and was likely to experience a sustained period of growth as a virtuous circle of production, income, and spending was likely to remain intact.
Members agreed that private consumption had been firm and was likely to follow a gradual uptrend, mainly reflecting the gradual increase in household income.
As for domestic private demand, members shared the view that business fixed investment continued to increase, and was likely to keep increasing, reflecting the ongoing growth in domestic and external demand and also the continuing high level of corporate profits. Many members said that the results of the March Tankan showed that business fixed investment plans for fiscal 2007 were relatively strong for the time of year, before the turn of the fiscal year in April.
Members expressed the view that production had remained on an increasing trend even though it had recently decreased marginally in reaction to the upsurge in the October-December quarter of 2006. They also said that production was likely to continue to be on an upward trend against the background of the rise in domestic and external demand.
As for the employment and income situation, members concurred that, in a situation where various indicators had continued to show tighter labor market conditions, household income had continued rising moderately.
Regarding asset prices, many members commented that both residential and commercial land prices had risen for the first time in 16 years according to the data in Land Price Publication.
On the monetary policy stance for the immediate future, members agreed that, based on their assessment of the economic and financial situation, it was appropriate to maintain the current guideline for money market operations that the Bank would encourage the uncollateralized overnight call rate to remain at around 0.5 percent.
Voting for the action was Mr. T. Fukui, Mr. T. Muto, Mr. K. Iwata, Ms. M. Suda, Mr. A.Mizuno, Mr. K. G. Nishimura, Mr. T. Noda, Mr. S. Nakamura, and Mr. H. Kamezaki.