The Bank of Japan kept monetary policy steady, maintained upbeat view

The Bank of Japan kept monetary policy steady, maintained upbeat view

The Bank of Japan kept monetary policy steady, maintained upbeat view

The central bank left the main lending rate and 10-year yield target unchanged at -0.10 percent and 0.00 percent respectfully.

The board majority says a solid recovery will alone bring acceleration toward its 2% inflation target, but Kataoka argued that with "excess supply capacity in capital stock and labor market", easing effects from current policy weren't enough.

The BOJ also maintained a loose pledge to keep buying bonds so its holdings increase at an annual pace of 80 trillion yen ($717.6 billion), diverting from the U.S. Federal Reserve's plan to steadily pull back from crisis-era measures.

The former economist did not propose lowering rates but said inflation was unlikely to accelerate towards 2 percent from next year, signalling the need for further easing steps to nudge up consumer inflation from current levels of around 0.5 percent.

The decision was made by a 8-1 vote.

With inflation distant from his target, Governor Haruhiko Kuroda will likely reassure markets the BOJ will lag well behind its USA counterpart in scaling back its massive stimulus at a post-meeting briefing at 3:30 p.m. (0630 GMT).

On the Japanese economy, the BoJ said that it is "expanding moderately", unchanged from its previous assessment.

The Japanese yen was little changed following the rate decision at around 112 against the USA dollar.

"Low interest rates are essential when you think about Japan's fiscal situation", even though the effect of ultra-easy policy in stimulating the economy has become very low, said Kazuhito Ikeo, an economics professor at Keio University.

Financial markets are largely unmoved following the release of the policy statement.

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