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BoJ Keeps Policy Steady Ahead Of Leadership Change


Japan's central bank decided to keep its monetary policy unchanged on Thursday, as Governor Masaaki Shirakawa chaired his final meeting ahead of a crucial leadership change, which is expected to pave way for bolder policy actions to beat deflation and revive the economy.

At the end of the two-day monetary policy meeting, the nine-member policy board unanimously voted to retain the benchmark uncollateralized overnight call rate at 0-0.1 percent. The board also decided to hold the size of the asset purchase program at JPY 76 trillion.

The meeting was the last for Masaaki Shirakawa as BoJ Governor, who will quit the post on March 19. Haruhiko Kuroda, the Japanese government's nominee for the top job and a strong advocate of aggressive monetary easing, is set to chair his first meeting in April.

At the meeting, board member Sayuri Shirai proposed to immediately put into effect the open-ended asset purchasing method and consolidate them with those conducted for facilitating money market operations. However, her proposal was defeated by a majority vote.

Another member Ryuzo Miyao proposed to stick to a virtually zero interest rate policy until the bank's 2 percent price stability target is in sight. The proposal was also voted down by other members.

Maintaining its assessment of the economy, the central bank said the economy has stopped weakening. Exports also appeared to have stopped decreasing, mainly reflecting better economic conditions in overseas economies.

The board said it expects Japan's economy to level off more or less for the time being and return to a moderate recovery path as domestic demand remains resilient and overseas economies emerge from deceleration phase.

BoJ said it will pursue monetary easing, through a virtually zero interest rate policy and purchases of financial assets, as long as the bank judges it appropriate to continue with each policy measure respectively. It also vowed to achieve the 2 percent inflation target at the earliest possible time.

by RTTNews Staff Writer

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