The Bank of Japan started a two-day policy meeting Monday, with discussions likely to focus on ways to ease volatility in the government bond market, including providing longer-term loans to financial institutions.
The nine-member Policy Board is expected to consider extending the term of its low interest rate fund provision operation from up to two years or longer to increase liquidity in the market to contain an unwanted spike in interest rates that could impede an economic recovery.
As for its aggressive monetary easing policy introduced in April, the central bank is likely to keep intact measures centering on doubling the monetary base and boosting the purchase of government bonds.
The BOJ may upgrade its current economic assessment if it confirmed a pickup in corporate production activities, observers say.