Several members of the Bank of Japan's Policy Board said at an emergency meeting March 25 that quantitative monetary-easing steps taken by the central bank did not produce the desired effects in stimulating the economy, according to minutes of the talks released Tuesday.
"They have not had sufficient stimulative effects on the economy due to the zero bound constraint on interest rates and the nonperforming loan problem," the minutes said.
Against this backdrop, the policy-setting panel discussed whether it was appropriate to "diversify the range of assets" the BOJ purchases as a measure to increase the effectiveness of the quantitative easing policy.
At the meeting, the BOJ panel decided to continue to inject ample liquidity into financial markets regardless of the central bank's liquidity target to better cope with the uncertain effects on Japan's economy of the war in Iraq.
After the meeting, the BOJ also announced a plan to increase purchases of stocks held by private banks by 1 trillion yen to 3 trillion yen to shield them from further falls in share prices.
The minutes said the board members discussed inflation targeting in relation to enhancing the transparency of monetary policy.
"One member emphasized the importance of setting a goal for policy rather than the target for money market operations, the outstanding balance of current accounts at the bank," the minutes said.
However, many board members were against the idea as it would not be easy to affect the expected inflation rate in the current situation. , the minutes showed.
"A few members expressed concern that there was a risk that nominal long-term interest rates might increase before the expected inflation rate rose," the minutes revealed.