March 19, 2024
Bank of Japan
Changes in the Monetary Policy Framework

1.

At the Monetary Policy Meeting held today, the Policy Board of the Bank of Japan assessedthe virtuous cycle between wages and prices, and judged it came in sight that the price stability
target of 2 percent would be achieved in a sustainable and stable manner toward the end of theprojection period of the January 2024 Outlook Report (Outlook for Economic Activity andPrices). The Bank considers that the policy framework of Quantitative and Qualitative
Monetary Easing (QQE) with Yield Curve Control and the negative interest rate policy to datehave fulfilled their roles. With the price stability target of 2 percent, it will conduct monetary
policy as appropriate, guiding the short-term interest rate as a primary policy tool, in response
to developments in economic activity and prices as well as financial conditions from theperspective of sustainable and stable achievement of the target.1 Given the current outlook foreconomic activity and prices, the Bank anticipates that accommodative financial conditions
will be maintained for the time being.
On this basis, the Bank made the following decisions, including that on the guideline for marketoperations.
(1) Guideline for market operations (a 7-2 majority vote) [Note 1]
The Bank decided to set the following guideline for market operations for the intermeeting
period.
The Bank will encourage the uncollateralized overnight call rate to remain at around 0 to0.1 percent.2

The Bank judged that the inflation-overshooting commitment regarding the monetary base had fulfilled theconditions for its achievement.
2 In order to achieve this guideline, the Bank will apply an interest rate of 0.1 percent to current accountbalances held by financial institutions at the Bank (excluding required reserve balances). The new guideline
for market operations and the new interest rate on the current account balances will be effective from March21, 2024.
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(2) Purchase of Japanese government bonds (JGBs) (an 8-1 majority vote) [Note 2]
The Bank will continue its JGB purchases with broadly the same amount as before.3 In
case of a rapid rise in long-term interest rates, it will make nimble responses by, for example,
increasing the amount of JGB purchases and conducting fixed-rate purchase operations ofJGBs -- both of which can be done so regardless of the monthly schedule of JGB purchases-- and the Funds-Supplying Operations against Pooled Collateral.
(3) Asset purchases other than JGB purchases (a unanimous vote)a) The Bank will discontinue purchases of exchange-traded funds (ETFs) and Japan realestate investment trusts (J-REITs).
b) The Bank will gradually reduce the amount of purchases of CP and corporate bonds
and will discontinue the purchases in about one year.
(4) Treatment of new loan disbursements under the Fund-Provisioning Measure to Stimulate
Bank Lending etc. (a unanimous vote)
The Bank will provide loans under the Fund-Provisioning Measure to Stimulate Bank
Lending, the Funds-Supplying Operation to Support Financial Institutions in DisasterAreas, and the Funds-Supplying Operations to Support Financing for Climate Change
Responses with an interest rate of 0.1 percent and a duration of one year. With regard tothe Fund-Provisioning Measure to Stimulate Bank Lending, the maximum amount of funds
that each eligible counterparty can borrow will be equivalent to the net increase in its
amount outstanding of loans.
2.

Japan's economy has recovered moderately, although some weakness has been seen in part (seeAttachment). Looking at the background conditions of wage developments, corporate profits
have continued to improve and labor market conditions have been tight. In this situation, asindicated by the results of this year's annual spring labor-management wage negotiations todate, it is highly likely that wages will continue to increase steadily this year, following thefirm wage increase last year. Moreover, anecdotal information from firms -- which is gathered
through the Bank's Head Office and branches -- suggests that a wide range of firms havemaintained their stance of raising wages. On the price front, while the effects of a pass-throughThe amount of JGB purchases is currently about 6 trillion yen per month. The Bank will continue toannounce the planned amount of JGB purchases with a range and will conduct the purchases while taking
account of factors such as market developments and supply and demand conditions for JGBs.
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to consumer prices of cost increases led by the past rise in import prices have waned, services
prices have continued to increase moderately, partly due to the moderate wage increases seen
thus far. As these recent data and anecdotal information have gradually shown that the virtuous
cycle between wages and prices has become more solid, the Bank judged it came in sight thatthe price stability target would be achieved in a sustainable and stable manner toward the endof the projection period of the January 2024 Outlook Report.

[Note 1]

Voting for the action: UEDA Kazuo, HIMINO Ryozo, UCHIDA Shinichi, ADACHI Seiji, NAKAGAWAJunko, TAKATA Hajime, and TAMURA Naoki. Voting against the action: NAKAMURA Toyoaki andNOGUCHI Asahi. While Nakamura Toyoaki was in favor of discontinuing purchases of ETFs andother assets, which were mainly related to large firms, he dissented, considering that the Bank should
continue with the negative interest rate policy until it confirmed that the capacity of small and mediumsized firms -- whose recovery in business performance was delayed -- to raise wages would likelyincrease. Noguchi Asahi dissented, considering that terminating the yield curve control framework andthe negative interest rate policy simultaneously should be avoided from the perspective that the Bank
should more carefully assess whether the virtuous cycle between wages and prices had become moresolid and avoid the risk of bringing about discontinuous changes in financial conditions.
[Note 2] Voting for the action: UEDA Kazuo, HIMINO Ryozo, UCHIDA Shinichi, ADACHI Seiji, NOGUCHI
Asahi, NAKAGAWA Junko, TAKATA Hajime, and TAMURA Naoki. Voting against the action:
NAKAMURA Toyoaki. Nakamura Toyoaki dissented for the same reason as he opposed the proposal
regarding the guideline for market operations.

3Attachment
Economic Activity and Prices in Japan: Current Situation and Outlook

1.

Japan's economy has recovered moderately, although some weakness has been seen in part.
The pace of recovery in overseas economies has slowed. Although exports have been affectedby the developments in overseas economies, they have been more or less flat. Industrial
production has been more or less flat as a trend, but it has declined recently, partly due to theeffects of a suspension of production and shipment at some automakers. With corporate profits
improving, business fixed investment has been on a moderate increasing trend. The
employment and income situation has improved moderately. Private consumption has been
resilient, although the impact of price rises and developments such as a decline in automobile
sales due to the suspension of shipment at some automakers have been observed. Housing
investment has been relatively weak. Public investment has been more or less flat. Financial
conditions have been accommodative. On the price front, the negative contribution of energy
prices to the year-on-year rate of increase in the consumer price index (CPI, all items less freshfood) has been relatively large, partly due to the government's economic measures. That said,
the rate of increase in the CPI has been at around 2 percent recently, mainly on the back of thefact that, despite waning, the effects of a pass-through to consumer prices of cost increases led
by the past rise in import prices have remained, and services prices have increased moderately.
Inflation expectations have risen moderately.

2.

Japan's economy is likely to continue recovering moderately for the time being, supported byfactors such as the materialization of pent-up demand, although it is expected to be under
downward pressure stemming from a slowdown in the pace of recovery in overseas economies.
Thereafter, as a virtuous cycle from income to spending gradually intensifies, Japan's economy
is projected to continue growing at a pace above its potential growth rate. The year-on-year
rate of increase in the CPI (all items less fresh food) is likely to be above 2 percent throughfiscal 2024, due to factors such as the effects, albeit waning, of the pass-through to consumer
prices of cost increases led by the past rise in import prices and a waning of the effects of thegovernment's economic measures pushing down CPI inflation of the previous year. Thereafter,
the rate of increase is projected to decelerate owing to dissipation of these factors. Meanwhile,
underlying CPI inflation is likely to increase gradually toward achieving the price stability
target, as the output gap turns positive and as medium- to long-term inflation expectations andwage growth rise.
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3.

Concerning risks to the outlook, there are extremely high uncertainties surrounding Japan's
economic activity and prices, including developments in overseas economic activity and prices,developments in commodity prices, and domestic firms' wage- and price-setting behavior.
Under these circumstances, it is necessary to pay due attention to developments in financial
and foreign exchange markets and their impact on Japan's economic activity and prices.

5Reference
Meeting hours:
Monday, March 18: 14:00-16:22
Tuesday, March 19: 9:00-12:28
Policy Board members present:
UEDA Kazuo, Chairman (Governor)
HIMINO Ryozo (Deputy Governor)
UCHIDA Shinichi (Deputy Governor)
ADACHI Seiji
NAKAMURA Toyoaki
NOGUCHI Asahi
NAKAGAWA Junko
TAKATA Hajime
TAMURA Naoki[Others present]
March 18
From the Ministry of Finance:
SAKAMOTO Motoru, Deputy Vice-Minister for Policy Planning and Coordination(14:00-16:22)
From the Cabinet Office:
INOUE Hiroyuki, Vice-Minister for Policy Coordination (14:00-16:22)
March 19
From the Ministry of Finance:
AKAZAWA Ryosei, State Minister of Finance (9:00-12:08, 12:17-12:28)
From the Cabinet Office:
IBAYASHI Tatsunori, State Minister of Cabinet Office (9:00-12:08, 12:17-12:28)
Release dates and times:
Changes in the Monetary Policy Framework -- Tuesday, March 19 at 12:35
Summary of Opinions -- Thursday, March 28 at 8:50
Minutes of the Monetary Policy Meeting -- Thursday, May 2 at 8:50