A few members, however, said that it was still uncertain whether structural reform, including the disposal of nonperforming loans, would make progress, and this uncertainty in the market was being reflected in recent developments in stock prices.
Meanwhile, a few members said that, if labor supply of seniors-- whose wage elasticity was high-- was maintained, this could continue to be a factor that constrained wage and price increases overall.
A few members noted that developments in credit spreads on corporate bonds and stock prices showed a further tendency to polarization between firms with high and low credit standings despite the Bank's ample funds provision.
On this point, a few members said that implications for the outlook for economic activity and prices and the future conduct of monetary policy would differ depending on the view taken regarding the potential growth rate and its background.
A few members added that, specifically, few clear effects of the measures had been observed in risk premiums on corporate bonds with low credit ratings, stock prices, or the foreign exchange market.
A few members pointed out a possibility that Japan's economy was becoming more vulnerable to external shocks, given the slowing of the increase in exports and production and the weakness in the positive momentum in the economy.
A few members said that some firms had been unable to pass on higher production costs resulting from the rise in crude oil prices, and attention should be paid to the effects on corporate profits.
With regard to developments in the corporate sector, a few members pointed out that firms remained cautious about future developments in demand, according to the Annual Survey of Corporate Behavior(Fiscal 2005) conducted by the Cabinet Office.
A few members referred to some concrete measures to this end, and said that they hoped that the Government would achieve immediate and concrete results in areas such as disposal of NPLs, tax reform, and deregulation.
A few members expressed the view that the background to the depreciation of the U.S. dollar was a slowdown in inflow of funds to the United States while it had a large amount of external debt and a large current account deficit.
A few members expressed the view that if SARS stopped spreading, East Asian economies would continue their steady growth, and this would increase the probability of a recovery of the Japanese economy in the second half of fiscal 2003.
As for recent developments in land prices, a few members said that attention should be paid to the factthat land prices in Tokyo metropolitan wards were starting to rise recently.
A few members expressed the view that domestic demand maintained its momentum in many countries and that global trade continued its recovery, albeit at a somewhat slower pace.
A few members expressed the recognition that the Bank should be more vigilant than before about whether the decreases in exports and production would spread to employment and domestic demand, thereby weakening the inflation momentum.
Meanwhile, a few members expressed the view that policy coordination with the government would become more important in a case where downside risks to overseas economies materialized and developments in economic activity and prices deteriorated significantly.
As for the yen's exchange rate against the U.S. dollar, a few members expressed the view that improvement in risk sentiment had restrained upward pressure on the yen stemming, for example, from the narrowed interest rate differentials between Japan and the United States.
A few members pointed out that the recent decline in crude oil prices was partly affected by demand-side factors such as concern about deceleration of the Chinese economy in addition to a supply-side factor of an increase in production levels by some oil-producing economies.
A few members then said that, although exports were likely to maintain their moderate growth for the time being, it was important to continue monitoring them carefully as there were some developments suggesting a slowdown in overseas economies, such as a decrease in machine tool orders from China.
A few members said that growth in production had so far been supported by IT-related goods, but this situation might change to one where the materials industry and sectors of the processing industry not related to IT underpinned production.
A few members said, however, that there could be a risk that the adjustments would be unexpectedly significant since developments in IT-related goods were difficult to forecast, and therefore future developments, such as Christmas sales, warranted careful monitoring.
A few members stressed that, in order to overcome deflation and realize sustainable growth, it was important not only to implement tax reforms and regulatory reforms, but also to achieve a fundamental resolution of the nonperforming-loan problem and stabilize the financial system.
A few members said that Japanese stock prices had declined toward the middle of August, but against the background of the continuing economic recovery, started to rise thereafter reflecting the rebound in U.S. stock prices, and were recently moving slightly above the level at the time of the previous meeting.
A few members, noting that the Bank had decided measures that would contribute to the continuation of powerful monetary easing at the previous meeting, pointed out that it still needed to constantly consider measures that would enhance the sustainability of monetary easing.
A few members said that if the potential growth rate had become higher than the Bank's assumed rate of approximately 1 percent presented in the Outlook Report, this might affect the Bank's outlook for prices through developments in the output gap and unit labor costs.
A few members pointed out that some leading indicators still suggesteda possibility that the economy might enter a recession, and that stock prices and long-term interest rates had been somewhat weak recently reflecting a cautious view of future developments in the economy.
On this basis, a few members noted that, if risks to the political situation in Europe-- such as developments in negotiations on the United Kingdom's exit from the European Union(EU)-- materialized, there was a possibility that a recovery in the European economy would lag or that the economy would decelerate more significantly than expected.
On this point, a few members said that, although the U.S. protectionist trade policy had been criticized at international conferences such as the Group of Seven(G-7) meetings, there were no pronounced signs at the moment that the situation surrounding the policy would improve.
Meanwhile, a few members pointed out that the deceleration in the pace of U.S. policy rate hikes might ease anxiety over capital outflows from emerging economies-- which had been a matter of concern a while ago-- and lead to stability of currencies and stock prices in those economies.
A few members said that this could have been due to various factors that increased uncertainty about the economic outlook at the time the forecast was made, such as weak stock prices, SARS, and the military action against Iraq.
However, a few members said that, in the present situation where market interest rates including those on term instruments had declined substantially, a discount rate cut would not have much easing effect, and it should rather be considered as a measure to secure liquidity in the markets.
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