It was determined at today's meeting that we cannot say that core consumer prices have stabilized above zero. The bank has not decided when to shift its policy.

[So-called core prices have risen in only one month since April 1998. They fell 0.1 percent in August from a year earlier, a government report showed Sept. 30. The point at which core prices reach stable gains] is getting pretty close, ... That means interest rates will eventually head toward positive territory.

However, in spite of the general perception that monetary policy should be conducted so as to avert deflation, a central bank cannot lower interest rates below the zero lower bound.

With core consumer prices set to rise steadily above zero and today's GDP report confirming that a steady recovery is at work, there is almost no obstacle left for the Bank of Japan in ending its super-loose monetary policy.

This is because the negative contribution from (weak) rice prices is likely to dissipate and the effects of a reduction in electricity and telephone charges are also expected to ease.

They emphasize the viewpoint that the protracted economic stagnation in Japan derives from incomplete economic adjustments to significant changes in relative prices.