Bank of Japan to adjust interest rates gradually - September minutes

TOKYO (Thomson Financial) - The Bank of Japan's policy board reaffirmed in September that it should raise interest rates gradually in line with economic growth and the outlook for consumer prices in order to prevent a

misallocation of resources, minutes from the board's Sept 18-19 meeting showed Monday.

The central bank also warned of the risk from unstable financial markets due to ongoing adjustments in the US housing market and the subprime loan problems.

The board members agreed that the central bank would "adjust the level of interest rates gradually, in accordance with improvements in the economic and price situation."

The board decided by a vote of 8-1 at the September meeting to leave the overnight call rate target at 0.5 percent. Board member Atsushi Mizuno voted against the proposal by governor Toshihiko Fukui.

At the bank's subsequent meetings on Oct 10-11 and Oct 31, policymakers also decided to leave interest rates unchanged. They had wanted more time to see how financial markets fared after the recent turbulence and how problems in the US housing market would affect the global economy before considering their next move.

The minutes of the September meeting showed that excessive positions in the markets, such as yen carry trades, had declined, thereby weakening "the upside risk arising from excessive......

Source: FXStreet