Repeated calls by a Bank of Japan Policy Board member to strengthen the BOJ's easy monetary policy finally led to a board decision at its Sept. 9 meeting to lower a key short-term interest rate, according to minutes of the meeting released Friday.On Sept. 9, the policy board decided to further ease its monetary policy by guiding the unsecured overnight call money rate from slightly below 0.5 percent to around 0.25 percent on average.The decision to further slash the short-term interest rate, which is applied to financial institutions when they obtain funds from money markets for their daily operations, showed the central bank finally decided to assist economic recovery with monetary measures.The rate cut was the first monetary policy easing in three years, although the BOJ has left the official discount rate unchanged at a historic low of 0.5 percent a year since Sep. 1995.The minutes of the Sept. 9 meeting show that Nobuyuki Nakahara, one of the nine board members and former president of oil refiner Tonen Corp., repeated his call for a rate cut as he had done at previous meetings.Since the June 12 board meeting, Nakahara had requested the board to lower the money rate in light of the deteriorating economic condition, but his requests were always rejected by a majority vote.At the Sept. 9 meeting, Nakahara argued the BOJ's money supply operations were implemented on the premise that the call money rate will change within a 0.40-0.42 percent range, the minutes show.To increase fund availability and improve worsening corporate finance, however, the rate should be guided toward 0.25 percent, the minutes show Nakahara as saying.Another board member supported his request, arguing that money markets became unstable due to a delay by the government in designing financial reform measures.The member concluded it was high time the BOJ took steps to wipe away the growing risk on money markets and demonstrate a determination to the public to stabilize the economy, the minutes show.The member proposed that the BOJ lower the money rate to 0.25 percent as well as banks' reserve ratios, the minutes show.
