Japan's central bank on Friday refrained from taking fresh easing measures despite increasing pressure from the government for powerful monetary easing. At the end of a two-day policy meeting, Bank of Japan's (BOJ) Governor Masaaki Shirakawa and his eight board colleagues voted unanimously to maintain the size of its asset purchase program at the current JPY 80 trillion (USD 1.02 trillion) in order to assess the effect of the additional measures they adopted two weeks ago.
On Sept 19th, the central bank expanded asset purchases by JPY 10 trillion (USD 127 billion) and extended the scheme by another six months to the end of 2013 to boost the country's economy. The board members also decided on Friday to keep the unsecured overnight call loan rate at a range of zero percent to 0.
"The BOJ recognizes that Japan's economy faces the critical challenge of overcoming deflation and returning to a sustainable growth path with price stability," the central bank said in a statement after the meeting. "The BOJ will also do its utmost to ensure the stability of Japan's financial system, while giving particular attention to developments in global financial markets, " it said.
With regard to the outlook, the BOJ said Japan's economy is expected to level off more or less for the time being, and thereafter, it will return to a moderate recovery path as domestic demand remains resilient and overseas economies gradually emerge from the deceleration phase. However, it also pointed out risks to the economic outlook, such as a high degree of uncertainty about the global economy, including the prospects for the European debt problem and the momentum toward recovery for the US economy.
In an unusual action, newly appointed Economic and Fiscal Policy Minister Seiji Maehara attended Friday's policy meeting as a government representative, apparently to seek further monetary easing. "I attended today's meeting to express strong concerns about the yen's strength and continued deflation," Maehara, who took office on Monday, told reporters after the meeting. "I want to continue urging the BOJ to pursue powerful monetary easing to overcome deflation," he said. Maehara was the first Cabinet minister to attend the policy-setting meeting since 2003. Representatives from the government are eligible to attend monetary policy meetings and express opinions, but do not have voting rights. The government normally sends a deputy minister or a high-ranking official to such meetings.