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Japan Maintains Monetary Stimulus


The Bank of Japan kept its massive monetary stimulus unchanged on Friday, as widely expected, ahead of Governor Haruhiko Kuroda's second five-year term set to begin in April.

Kuroda and his board members decided by an 8-1 majority vote to hold its target of raising the amount of outstanding JGB holdings at an annual pace of about JPY 80 trillion.

The bank will purchase government bonds so that the yield of 10-year JGBs will remain at around zero percent.

The board also decided to maintain the -0.1 percent interest rate on current accounts that financial institutions maintain at the bank.

Again, the sole dissenting member Goushi Kataoka said the bank should take additional easing measures if there was a delay in the timing of achieving the price stability target.

This was the last meeting of outgoing Deputy Governors Kikuo Iwata and Hiroshi Nakaso.

The upcoming leadership reshuffle is unlikely to alter the balance of opinion within the Board dramatically, Marcel Thieliant, an economist at Capital Economics, said.

"If the Bank decides to tighten policy it will because of concerns about financial stability rather than because of stronger price pressures," the economist said.

The central bank said Japan's economy is expanding moderately, with a virtuous cycle from income to spending operating. The economy is expected to continue its moderate expansion.

Further, the bank said the annual rate of change in the consumer price index is set to continue on an uptrend and increase toward 2.0 percent.

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