Governor Masaru Hayami reportedly said at a business conference the economy isn't falling into a deflationary spiral. The BOJ will continue to act flexibly and take the "most appropriate" steps for the economy, he said. He reiterated that the BOJ must carefully consider the effects and side-effects of measures such as adopting zero interest rates again or increasing outright purchases of government bonds. However, a further assessment of economic conditions would be required before any decision.
Finance Minister Kiichi Miyazawa reportedly said he did not see enough reason to use the weaker yen as a policy tool, although it would be acceptable for the currency to weaken naturally. He also said he did not see any reason to inject more money into the indebted banking system. He said he did not have high expectations for Oct-Dec GDP growth, although Jan-Mar should be alright, which should mean growth in the full fiscal year. He said the government's target of 1.7% growth in FY2002 could be achieved.
The ruling coalition could finalise by Friday measures to support the equity market, improve liquidity in the real estate sector, and call for easier monetary policy as part of an emergency economic package, the Nikkei newspaper reported. The newspaper also lists the proposals, but there are none dealing with the key reason for the weakness of the equity market, namely the parlous state of banks' balance sheets.
Prime Minister Yoshiro Mori denied reports that he would resign next week. He reportedly told a parliamentary budget panel that he won't quit now because there are many items on his plate, including the passage of the next fiscal year budget.