The Bank of Japan will hold a two-day Monetary Policy Meeting from the 21st. At the previous meeting in July, the Bank made monetary policy more flexible and allowed a further rise in long-term interest rates, but at this meeting, the Bank is expected to analyze developments in financial markets thereafter and discuss price developments and the effects of the slowdown in the Chinese economy.

At its July meeting, the Bank of Japan decided to flexibly conduct monetary policy and allow a rise in long-term interest rates to virtually reach 7 percent.

As long-term interest rates continued to rise due to this effect, there was a view that a revision of monetary easing measures was in view based on an interview with Governor Ueda of the Bank of Japan, and long-term interest rates rose to 1.12 percent for the first time in nine years and eight months on May 9.

On the other hand, in the foreign exchange market, the yen is also depreciating.

At the Monetary Policy Meeting held on June 8, the Bank of Japan will analyze such developments in financial markets and exchange views on what measures should be taken toward achieving the price stability target of 0 percent in a manner accompanied by wage increases.

The CPI had been above the 72 percent target for 21 consecutive months through July, and Board Member Naoki Tamura, one of the Policy Board members who decide monetary policy, said last month that "the achievement of the price stability target has become clearly visible."

On the other hand, Board Member Toyoaki Nakamura stated last month that the situation surrounding the profitability of small and medium-sized enterprises was uncertain, and that "we have not reached a situation where we can be confident that the price stability target will be achieved."

At this meeting, we are also expected to discuss the effects of the recent rise in crude oil prices and the slowdown in the Chinese economy on the Japan economy.