2012.06.15 05:35:04 BOJ Leaves Overnight Call Rate At 0.0% to 0.1%

TOKYO--The Bank of Japan held off from taking additional easing action
Friday, keeping its options open in case a sharp deterioration in the
European debt crisis threatens Japan's economic recovery.

The central bank's policy board voted unanimously following a two-day
meeting to maintain the size of its asset purchase program--the BOJ's
main tool for monetary easing amid near zero interest rates--at Y70
trillion.

The central bank also decided unanimously to keep its policy rate, the
unsecured overnight call loan rate, in a 0.0%-0.1% range.

The meeting was held just two days before a closely watched Greek
election on Sunday, the outcome of which may have a large impact on
global financial markets.

While nine of 11 economists polled by Dow Jones Newswires had
anticipated that the BOJ would stand pat this time, most expect it to
take additional easing steps in July. At its July 11-12 meeting, the
BOJ policy board is slated to review its price forecasts, which are
expected to fall short of the bank's 1% inflation goal.

Analysts also see the possibility of an emergency board meeting being
convened before the July meeting to decide on further easing in the
event of a sudden worsening in the European crisis.

"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," stemming from European debt concerns, the
central bank said in a statement released together with the rate
decision.

In April, the policy board decided to buy Y10 trillion more Japanese
government bonds under its asset-purchase program to strengthen its
efforts to achieve its 1% inflation goal. It also extended the
maturity of the bonds it buys from the markets to three years from two
years previously.

Meanwhile, the central bank upgraded its assessment of the domestic
economy, saying it "has started picking up moderately as domestic
demand remains firm, mainly supported by reconstruction demand."

The BOJ said last month that it has become increasingly evident that
the economy is shifting toward a pick-up phase, although it said that
economic activity has remained more or less flat.

Market participants will now focus on Gov. Masaaki Shirakawa's
comments at a press conference from 0630 GMT for hints on the
possibility of additional easing.

-Takashi Nakamichi contributed to this article

Write to Tatsuo Ito at tatsuo.ito@dowjones.com


(END) Dow Jones Newswires

June 14, 2012 23:35 ET (03:35 GMT)