As risk factors to which attention shouldbe paid for some time, many members raised developments in the Chinese economy and effects of the rise in crude oil prices on Japan's economic activity and prices.
With regard to prices, many members commented on international commodity prices that crude oil prices remained at high levels due mainly to geopolitical risks, and prices of other commodities such as nonferrous metals continued to increase.
Many members noted that consumer sentiment had improved recently, partly on the back of a favorable employment and income situation and a recovery in stock prices, adding that private consumption remained on an increasing trend.
Many members pointed out the uncertainty of the outlook for the world economy, such as developments in the Middle East, crude oil prices, and emerging markets, in addition to those in the U.S. economy.
With regard to East Asian economies, many members commented that both domestic and external demand continued to expand strongly in China, and that the NIEs and ASEAN economies continued to expand at a moderate pace.
As for prices, it was the view of many members that prices would remain generally flat for the time being although the output gap was still large and downward pressure on prices persisted.
Many members said that the"twin deficits" in the United States, increasing concerns about geopolitical risks, and resulting changes in international capital flows continued to be major risk factors for the U. S.
With regard to the Chinese economy, many members said that both domestic and external demand continued to expand strongly, as seen for example in fixed asset investment, which continued to show relatively high growth.
Moreover, many members expressed the view that, according to developments in various indicators and interviews with firms, the effects of the U.S.-China trade friction and the global decline in stock prices had been limited so far.
Many members said that the undersubscription was proof that the Bank was providing liquidity to its utmost and this fact itself was contributing to the maintenance of stability in the market.
Many members expressed the view that it was appropriate to extend the projection period of the April Outlook Report, which currently covered only the fiscal year in which it was released, by one year to include the following fiscal year.
Many members said that downside risks stemming from deterioration in overseas economies particularly the U.S. economy and weak stock prices at home and abroad continued to require monitoring.
Many members said that, in many economies, business and consumer sentiment had been steady, and positive momentum in domestic demand had been maintained.
Many members said that the pace of growth in overseas economies, particularly the United States and East Asia, was likely to decelerate gradually and they were likely to continue growing at around their potential growth rates.
Many members said that domestic corporate goods prices continued to increase, reflecting the rise in international and domestic commodity prices, such as crude oil prices, and the improvement in overall supply and demand conditions.
On the U.S. economy, many members said that it continued to expand steadily, led mainly by household spending and business fixed investment, and was likely to keep expanding at a pace around its potential growth rate.
Many members said that the growth rate of the U.S. economy was expected to increase reflecting firm private consumption and a recovery in IT-related demand.
Many members noted that the impact of the U.S. macroeconomic policies on global financial markets and emerging economies, negotiations on the United Kingdom's exit from the EU, and various geopolitical risks also were risk factors concerning overseas economies.
With regard to the household sector, many members pointed out that many of the indicators related to private consumption, such as sales of digital appliances, sales at retail stores and department stores, and new passenger-car registrations, were increasing recently or remained firm.
Many members pointed out that recent economic indicators suggested that(1) corporate profits and sentiment had clearly improved,(2) business fixed investment had started to pick up, and(3) the decrease in the number of employees and wages was slowing.
On the timing of the termination of the zero interest rate policy, an issue that hadattracted the market's attention since the end of June, many members reconfirmed that the Bank would maintain the zero interest rate policy until deflationary concern was dispelled.
Based on this discussion, many members pointed out that it was important to continue to conduct a multifaceted monitoring and assessment of the positive effects and side effects that could arise from the continuation of powerful monetary easing, including those on the functioning of financial intermediation and the financial system.
Many members presented a positive assessment that Japan's economy generally had started to recover smoothly, raising as a feature of recent developments in economic indicators the fact that the increase in exports and production was becoming more evident.
Many members pointed out that the rates of increase in business fixed investment plans for fiscal 2019 in the March Tankan-- including those of the manufacturing sector-- had turned out to be relatively high for this time of year, despite the weakness in exports and production.
With regard to East Asian economies, many members said that although the spread of SARS had negatively affected private consumption and some business activities, such as business negotiations, its effects on the overall economy were likely to be limited.
Many members pointed out the considerable uncertainty of the outlook for the environment for exports, including the global downward trend in stock prices and geopolitical factors, in addition to the uncertainty of future overseas economic developments including in the United States.
Therefore, many members shared the view that the possibility was decreasing that the standard scenario--progress in the adjustment in the U.S. economy would gradually reduce downward pressure on Japan's exports and production in the second half of fiscal 2001--would materialize.
Many members pointed out that(1) the economies of the United States, Europe, and Asia were slowing further recently; and(2) in contrast to this, stock prices and long-term interest rates in overseas markets were rising reflecting market expectations for an economic recovery in the future.
On this point, many members presented the opinion that the government and the Bank shared the view that exchange rate stability reflecting economic fundamentals was desirable, and that excessive fluctuation of the rate could adversely affect the economy and prices.
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