Bank of Japan leaves monetary policy unchanged, as expected

TOKYO (AFP) - The Bank of Japan's policy board voted unanimously to leave its ultra-easy monetary policy unchanged, as widely expected.
"The Bank of Japan will conduct money market operations, aiming for an outstanding balance of current accounts held at the bank of around 30 to 35 trillion yen (273-319 billion dollars)," the central bank said in a statement after a scheduled meeting begun Tuesday.
The statement, unchanged from those issued after previous meetings, refers to the "quantitative" credit easing in which the bank pumps cash into the financial system instead of lowering key short-term rates that are already near zero percent.
The central bank has vowed repeatedly to continue supporting the current economic recovery with a stimulative policy until deflation gives way to mild inflation while trying to keep expectations of future interest rates at low levels to help borrowers.
"Should there be a risk of financial market instability, such as a surge in liquidity demand, the bank will provide more liquidity irrespective of the above target," the central bank said Wednesday, as it has done previously.
Bank of Japan Governor Toshihiko Fukui has vowed to maintain the central bank's super-loose credit policy until the year-on-year change in the nationwide core consumer price index stays at or above zero.
Core consumer prices in Japan, which exclude volatile fresh food prices, fell 0.2 percent in August from a year earlier.
Core consumer prices in Tokyo, a leading indicator of nationwide trends, fell 0.1 percent in September from a year earlier, but were unchanged from August.
Prime Minister Junichiro Koizumi has also pledged to continue fighting deflation, which have squeezed profits and prompted salary cuts and layoffs.
"The government will continue working closely with the Bank of Japan to ensure we will move out of deflation," Koizumi told parliament Tuesday.
The bank last changed policy on January 20, 2004, when it raised the upper limit of the current account balance to the existing 30-35 trillion yen from 27-32 trillion yen in a further effort to support the economic recovery.
The central bank's policy board will next meet October 29.
Later on Wednesday, the central bank is due to release a monthly report on the state of the economy and trends in global and domestic financial markets.
Fukui is also expected to discuss the bank's policy and recent economic and financial market conditions at a news conference.