The Bank of Japan said Thursday its policy-setting panel has left its ultraloose monetary policy unchanged.
The announcement came despite recent speculation that the bank may lower the lowest range of its liquidity target due to lessening credit-risk fears.
As a benchmark for its easy monetary policy, the nine-member Policy Board decided unanimously to keep the target for the outstanding balance of banks’ deposits at the central bank within a range of 30 trillion yen to 35 trillion yen.
The target means the central bank is injecting ample liquidity into the financial system.
The Policy Board’s decision was made in the wake of the government’s announcement Wednesday that gross domestic product for the October-December period shrank 0.1 percent from the previous quarter in real terms. The figure contracted for the third straight quarter.
“The decision to keep the target comes from our judgment that it is possible to maintain the target,” BOJ Gov. Toshihiko Fukui told a news conference later in the day.
He admitted that the private sector’s demand for liquidity is decreasing, but added that he is still cautious about the state of the economy.
Market players are paying close attention to the BOJ’s position because any change in the monetary policy may be seen as a move toward credit-tightening, which could hurt the economy.
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