TOKYO, Nov. 26 (Xinhua) -- Senior Vice Finance Minister Yoshihiko Noda called on the Bank of Japan (BOJ) to clearly voice its position on tackling inflation, according to the minutes released Thursday of the central bank's policy meeting held on Oct. 30.

    On Friday, the government officially announced that the Japanese economy is in a period of mild deflation as consumer prices kept falling, this was the first time such an assessment has officially been made regarding the nation's negative rate of inflation in more than three years.

    The minutes also revealed the BOJ may look to reuse and extend its special low-interest loan facility, beyond its expiration period at the end of March 2010, should corporate fundraising initiatives fail to buoy companies through a period of deflation, that, according to the central bank, could last as long as three years.

    "As the rate of inflation was projected to be negative for an extended period, the government expected the bank to put particular focus on clearly presenting its stance," Senior Vice Finance Minister Yoshihiko Noda was quoted as saying at the meeting.

    The BOJ's biannual economic forecast was also a key discussion point and reports show that Japan's central bank has predicted, "three years of deflation through fiscal 2011, while its economy gradually picks up."

    "Attention should continue to be paid to the risk that, in a situation where the substantial slack in the economy was likely to persist, prices might become weaker than expected if firms' and households' medium-to long-term inflation expectations declined," according to a discussion summary of the meeting.

    One policy board member was of the opinion that, "when judged necessary, the bank of Japan should employ appropriate measures --including reutilization of special funds-supplying operations to facilitate corporate financing, in a flexible and timely manner." All other members agreed with this view," the sentiment was agreed upon by all of the bank's eight-member Policy Board, according to the Oct. 30 discussion minutes.

    The general consensus at the meeting was that although issues of corporate financing were improving, commensurate to Japan's economic advances, the BOJ would maintain a cautious stance regarding their outlook for company's equity financing and be prepared to step in and provide fiscal support if and when necessary.

    As the BOJ agreed that its corporate debt program, involving the outright purchasing of commercial paper and corporate bonds would cease at the year-end, the Policy Board also agreed during the meeting to extend its special loans program's expiration date by three months, to the end of March, at which time it will expire.     

    The facility currently makes provisions for three-month corporate loans at an interest rate of 0.1 percent. After this facility expires, more conventional means of fund acquisition will be introduced through money market measures, was the conclusion reached and agreed upon by the majority of the gathering on Oct. 30.

    Parliamentary secretary of the Cabinet Office, Keisuke Tsumura, proposed that the BOJ set up meetings with the government. He said it is important for the central bank and the government to "frequently" exchange views regarding economic and financial developments to "appropriately" conduct their respective policies, according to the minutes.

    BOJ Governor Masaaki Shirakawa contended that the central bank had been exchanging views appropriately with the government and would continue to do so. He also maintained monetary policy procedure would "ultimately" be decided by the BOJ' s Policy Board.

    It was also decided at the policy meeting that Japan's central bank, at the end of the year, would start "unwinding" the emergency funding initiatives it had introduced to cope with the global financial crisis, while retaining its key interest rate at 0.1 percent, discussion summaries said.

Special Report:  Global Financial Crisis