BOJ holds policy steady, adopts loan scheme for quake-hit areas

[TOKYO] The Bank of Japan held off on expanding monetary stimulus on Thursday, even as global headwinds, a strong yen and soft consumption threatened to derail a fragile economic recovery.

The central bank maintained its pledge to increase base money, or cash and deposits in circulation, at an annual pace of 80 trillion yen (S$985.80 billion). It also left unchanged a 0.1 per cent negative interest rate it applies to some of the excess reserves financial institutions park at the BOJ.

The BOJ decided to adopt a 300 billion yen loan-supplying programme aimed at assisting banks operating in areas hit by this month's earthquake in southern Japan.

Its decision to keep the base money target was made by an 8-1 vote, while its decision to maintain the 0.1 per cent negative rate was made by a 7-2 vote.

BOJ Governor Haruhiko Kuroda will hold a news conference at 3:30 pm (0630 GMT) to explain the policy decision.

The BOJ stunned markets in January by adding a 0.1 per cent negative interest rate to its massive asset-buying programme, dubbed "quantitative and qualitative easing" (QQE), in a fresh attempt to accelerate inflation to its 2 per cent target.

REUTERS