The Bank of Japan started a two-day Policy Board meeting Monday to assess the impact of its recent monetary-easing steps to address the yen's sharp rise, and to look into the downside risks to the economy.
Many market players expect the BOJ to maintain its monetary policy, including leaving its key interest rate at a razor-thin 0.1 percent, during the gathering, which is being held a week after the bank decided to expand its low-interest funding program.
In a move to make more funds available to financial institutions, the BOJ decided at an unscheduled meeting Aug. 30 to expand its lending program by launching a new ¥10 trillion, six-month program in addition to its current ¥20 trillion, three-month funding operation.
As a result, the total size of loans offered by the BOJ at a fixed interest rate of 0.1 percent under the funding operation introduced in December has increased to ¥30 trillion.
But the BOJ's decision was roughly within the scope of market expectations, and the yen remains at a high level against other major currencies.
The unit rose to a nearly 15-year high in the mid-¥83 level against the dollar last month. A strong yen is generally unfavorable for Japanese exporters, a key driving force of the economy, because it erodes the value of their earnings when repatriated.
The BOJ may have to consider additional easing steps if the yen rises further, but pundits say Japanese authorities are hamstrung when comes to tackling the yen's rise because U.S. economic woes are at the core of the problem.