The Bank of Japan decided Tuesday to keep its monetary stance unchanged, judging it necessary to get the nation on a clearly sustainable recovery amid renewed worries about the economy after Prime Minister Junichiro Koizumi called for a general election.
The BOJ Policy Board voted seven to two at the end of a two-day meeting to leave unchanged its target range for liquidity, or the account balance of commercial banks at the central bank, in a range of 30 trillion yen to 35 trillion yen.
The bigger the range, the more excess cash is allowed to flow through the financial system, encouraging lending and helping recovery.
The central bank also left its monthly purchases of government bonds at 1.2 trillion yen.
On Monday, the yen plunged in Asian trading on worries about Japan’s economy after Koizumi called an election for Sept. 11 in an effort to win a mandate after members of his ruling party sided with the opposition in defeating the postal privatization bills. The yen has since recovered some of its earlier losses.
Koizumi has made postal privatization the center of his reforms. The reforms could prove critical for the economy because the postal system also includes massive banking operations.
Big business has been a strong supporter of Koizumi’s reform efforts, and worries are simmering about political risks that could stall reforms for smaller government.
Japan has struggled to wrest itself out of stagnation, and the economy has been on a moderate rebound in the last few years.
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