• Kyodo

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The Bank of Japan began Monday a two-day policy meeting and was likely to refrain from further easing its monetary grip as it seeks to assess the effects of easing steps taken for two straight months amid a slowdown in the economy.

The central bank is expected to maintain its key short-term interest rate at around zero to 0.1 percent, as well as the size of its asset purchase program currently set at ¥91 trillion, after expanding the fund by ¥11 trillion on Oct. 30.

Because the BOJ took additional steps in the previous meeting amid a slowdown in the global economy and worsening ties between Japan and China, it is likely to evaluate their impact to see if further policy moves are needed.

Recent data show the economy has been decelerating. Japan’s gross domestic product for the July to September period contracted for the first time in three quarters, showing the nation is faced with a decline in output as well as a deterioration in employment and consumption due to slumping exports.

But financial markets are moving inversely to such concerns recently, as stocks have been rising due partly to a weakening yen amid speculation that the BOJ would take stronger easing steps after a new government is formed following the general election next month.

Shinzo Abe, leader of the Liberal Democratic Party, has expressed hope that the BOJ would put its key policy interest rate below zero, while saying the bank should aim for an inflation target to achieve an annual inflation rate of 2 to 3 percent.

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