24 May 2006, 10:32  BOJ minutes: can finish c/a cut if market stable

A member of the Bank of Japan's policy board said the central bank could finish absorbing excess funds in the banking system as planned if markets remained stable, but another warned against moving too quickly, minutes of its April 10-11 meeting showed on Wednesday. The second member said there was growing speculation in the market that the BOJ would raise rates earlier than had been expected and there was a risk of such speculation increasing if the funds were cut too rapidly, the minutes said. The meeting was the first after the BOJ scrapped its ultra-easy monetary policy of flooding the banking system with excess funds on March 9 and reverted to a conventional policy of targeting interest rates. Financial markets expect the central bank to raise short-term rates from around zero as early as July.

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