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.

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.

With weak balance sheets, banks tend to continue lending unprofitable businesses and leave them existing.

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

Well-functioning financial systems are important in achieving sustained economic growth. They play a crucial role in channeling household savings into the corporate sector and allocating investment funds among firms.