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Financial conditions in Japan had deteriorated sharply on the whole, the BoJ states in its latest minutes of the Monetary Policy Meeting which took place on 18-19 December. Members agreed that funding conditions for firms had tightened further, and it was becoming difficult for the effects of low interest rates to permeate the economy.
The economic conditions in Japan had been deteriorating due mainly to the decrease in exports caused by the slowdown in overseas economies and to the weakening of domestic demand, as well as to the sharp deterioration in financial conditions, and that they were likely to increase in severity for the immediate future.
There was growing uncertainty regarding the outlook for Japan's economy that it would return onto a sustainable growth path with price stability; and, given the slowdown in overseas economies and the turmoil in global financial markets, it would likely take some time for the necessary conditions for Japan's economic recovery to be satisfied.