TOKYO (AFX-ASIA) - The Bank of Japan said it has decided to increase the outstanding balance of current accounts held at the central bank to around 6 trln yen from 5 trln previously.
The bank added that it will also increase its outright purchases of long-term government bonds to 600 bln yen per month from 400 bln currently "in order to smoothly provide liquidity under the new guideline".
The decision was made by majority vote.
The bank said it is encouraged by recent government reform moves, adding: "A series of monetary easing measures, including today's decision, are consistent with providing maximum support for such reform efforts in various areas."
The risk remains that falling production will spread to the domestic-demand sector, it said.
"Economic adjustments are deepening as industrial production is sharply declining due to a fall in exports," the bank said in a statement.
"Risks are increasing for the adjustments to spread to wider areas as falling production is expected to cause an associated decline in domestic demand," it said.
"Recent capital market developments at home and abroad may also adversely affect the real economy. A weaker demand could intensify downward pressure on prices in the coming period."
"Given the adverse recent and prospective developments regarding growth and prices, the bank considered it appropriate and necessary to further strengthen monetary support for economic recovery under the new framework established in March."
"The Bank will continue to make every effort as a central bank to support Japan's economy so that it could return to a stable and sustainable growth path."
"However, given economic developments worldwide and the seriousness of confronting problems, it is not an easy task to revitalize Japan's economy."
"Progress in structural reforms is indispensable for monetary easing to exert its full potential, which would help restore Japan's economy to a stable and sustainable growth path," the bank said. "In this regard, it is encouraging that concrete steps for reforms have started to take place under the strong leadership of the government," it said.
"A series of monetary easing measures, including today's decision, are consistent with providing maximum support for such reform efforts in various areas," it said.
"The Bank of Japan strongly hopes that the government and the private sector will make further steady progress in structural reforms, while overcoming associated short-term pains."