The Bank of Japan Policy Board decided by a majority vote Thursday to maintain its ultraeasy monetary policy.

After the one-day meeting of the nine-member board concluded, the BOJ said it has decided to "provide ample liquidity to the money market by aiming at maintaining the outstanding balance of current accounts held at the bank at above 6 trillion yen."

The balance has recently been hovering at around 9 trillion yen.

The BOJ acknowledged that the economy is worsening and has been closely watching price developments to prevent deflation, but it has been reluctant to take further credit-easing steps and says its current monetary-easing policy, which guides interest rates to nearly zero, has reached its limit.

Senior BOJ officials, including Gov. Masaru Hayami, said that demand for funds has been weak despite the ample liquidity it is providing and that commercial banks have not been extending loans due to their continuing debt problems.

Politicians in the ruling coalition have been pressing the BOJ to take additional measures to prevent a deflationary spiral, but the central bank has been sticking to its policy since Sept. 18.

Meanwhile, the risk of the economy falling into a vicious deflationary spiral where declining prices dampen business activity, leading to lower incomes and reduced spending, continues to grow.

Hayami has repeatedly emphasized that monetary measures must be accompanied by government steps to accelerate the disposal of bad loans at private banks and to promote economic structural reform.

He has also dismissed calls to set an inflation target in the BOJ's monetary policy, calling the step "still inappropriate."

The central bank is under mounting pressure to take whatever additional steps it can because the government is struggling to follow through on its plan for economic reform. However, earlier this week, the government quickly decided to compile a 2.5 trillion yen second extra budget for fiscal 2001.