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Pastimes : The Naked Truth - Big Kahuna a Myth -- Ignore unavailable to you. Want to Upgrade?

To: wlheatmoon who wrote (25931)	3/18/1999 6:44:00 AM
From: John Pitera	Read Replies (1) \| Respond to of 86076

No, but maybe I should be...-eg-

To: wlheatmoon who wrote (25931)	3/18/1999 6:57:00 AM
From: John Pitera	Read Replies (1) \| Respond to of 86076

This article cites a source that claims 90% of the Japanese monetary base is currency in circulation. I think that is preposterous. -ng- Japan's Central Bank Reveals Debate Over Monetary Easing March 18, 1999 By MICHIYO SEKI Dow Jones Newswires TOKYO -- The Japanese central bank revealed that its policy board debated an unprecedented plan to expand money supply at a Feb. 12 meeting, underlining the central bank's concern about the dire state of the economy. But the fact that the board decided to take the more conservative step of guiding short-term interest rates lower suggested that while the Bank of Japan still could go ahead with "quantitative easing" in the future, there is little chance it will do so in the near-term, analysts said. "The Bank of Japan will stick to targeting interest rates as its main money policy tool and will continue to flood the market with liquidity," said Masuhisa Kobayashi, fixed-income strategist at Merrill Lynch Japan. The minutes from the meeting showed that board member Nobuyuki Nakahara proposed that the Bank of Japan move ahead with "quantitative easing" by keeping the key overnight call rate as low as possible and encouraging an expansion in the monetary base -- currency in circulation and bank deposits. His proposal was voted down eight to one. Instead, the board agreed to guide the overnight call rate to 0.15% and lower. Mr. Nakahara's proposal seemed aimed at showing that the Bank of Japan still has room to ease monetary policy, even with one of its main policy tools, the unsecured overnight call rate, near zero. The weighted average of the key overnight rate fell to a record low of 0.03% on March 4, and has stayed around there since then. Indeed, speculation has been rife recently that the Bank of Japan could now charge ahead with innovative easing steps. Guesses about what the central bank may do next have ranged from the Bank of Japan guiding longer-term money market rates lower, to targets for inflation or money growth. Bank of Japan officials have said the central bank is studying various monetary options, although they have consistently said there is no need to change policy now. "We are studying various policy goals, but there's no need to be rash and it's only been two weeks" since overnight call rates fell to nearly zero, Bank of Japan Gov. Masaru Hayami said Tuesday, adding that the central bank's dominant policy tool remains its overnight call rate target. Shunji Nomura, senior strategist at Sumitomo Capital Securities, said the minutes show that the board's dominant view is that the Bank of Japan shouldn't give the impression it would abandon interest rates as a policy tool. Members of the Bank of Japan board also presented some other counterarguments. One expressed doubt about the feasibility of targeting the monetary base, since about 90% of the base was currency in circulation. That means the central bank will have little control of the base since it tends to move in tandem with currency in circulation, and not bank reserves.