Another member proposed "establishing a numerical target" for the unsecured overnight call money
rate and "implementing a slight easing of policy by setting the target around 0.
The BOJ thereby re-adopted the unsecured overnight call money
rate as a monetary policy target instead of using the outstanding balance of current account deposits held by private financial institutions at the central bank.
At the upcoming Policy Board meeting, the central bank is also expected to decide to increase the official discount rate, which serves as the ceiling for the overnight call money
rate, to between 0.
The BOJ chief also said the call money
market has begun to recover the function of interest rate formation and the overnight call rate has started to reflect financial market environments.
Following the BOJ's move, the overnight unsecured call money
rate fell to 0.
5 trillion yen into the money market -- a record for a BOJ same-day operation -- to put downward pressure on unsecured overnight call money
The new rate matches the low seen in May and June of 1999, when the central bank guided the call money
rate to nearly zero.
The central bank's eight-member Policy Board voted unanimously to keep the target rate for unsecured overnight call money
Further monetary easing measures would include a return to the zero interest rate policy, under which the target for the call money
rate is driven to around zero.
Asked to comment on the Bank of Japan's decision last week to guide the key unsecured overnight call money
rate to around 0.
The central bank's policy board has unanimously decided to keep the target rate for unsecured overnight call money
on hold, it said.
The central bank has injected fresh liquidity into the money market as overnight call money
rates on borrowing by foreign banks remained in the mid-0.