BOJ keeps policy steady, revises up view on economy

[TOKYO] The Bank of Japan kept monetary policy steady on Thursday and offered a more upbeat view of the economy than last month, signalling its confidence that a pick-up in overseas demand will help sustain an export-driven recovery.

But the central bank slightly cut its inflation forecast for this fiscal year in a quarterly review of its projections, suggesting that it will maintain its massive monetary stimulus for the time being to achieve its ambitious 2 per cent target.

"Japan's economy has been turning towards a moderate expansion," the BOJ said. That compared with the previous month's assessment that Japan's economy continues to recover moderately as a trend.

In a widely expected move, the BOJ maintained the 0.1 per cent interest it charges on a portion of excess reserves that financial institutions park at the central bank.

At the two-day policy meeting that ended on Thursday, it also kept its yield target for 10-year Japanese government bonds around zero per cent.

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

After more than three years of huge asset purchases failed to accelerate inflation, the BOJ revamped its policy framework last September to one aimed at capping long-term interest rates.

REUTERS