Tokyo, Nov. 19 (Bloomberg) -- Japan's central bank said it will increase the amount of cash it makes available to commercial banks closer to the current limit of 20 trillion yen, a move analysts said is meant to encourage lending and bolster the economy. Bonds rose on expectations the central bank would have to increase its monthly purchases from banks. The central bank today left the amount of bonds it buys each month at 1.2 trillion yen ($9.9 billion). With interest rates already near zero, the central bank says there's little more it can do to pull the world's No. 2 economy out of a 12-year slump except pump more cash into the banking system. Last month, it increased monthly bond purchases by a fifth to support government efforts to speed write-offs of an estimated $433 billion of bad loans suffocating the economy.
``The central bank may come under renewed pressure to support the economy and stock prices later,'' said Mamoru Yamazaki, chief economist at Barclays Capital Japan Ltd. ``Until then, the bank needs to preserve policy options, such as expansion of bond purchases.'' The No. 243 bond maturing in 2012 and carrying a 1.1 percent coupon rose 0.271 to 100.985 as of 1:53 p.m. in Tokyo. Its yield fell 3 basis points to 0.99 percent. A basis point is 0.01 percentage point. The central bank may look at ``raising the range again, and that would likely be accompanied by an increase in Japanese government bond purchases,'' said Naomi Hasegawa, a senior fixed income analyst with MMS International in Singapore. The central bank makes cash available to commercial lenders through purchases of bonds and other government securities. Yesterday, the level of cash available to Japan's banks stood at 18.13 trillion yen. ``Within the range of between 15 trillion yen and 20 trillion yen, Bank of Japan policy makers agreed that the bank should try to push reserves as close to the upper limit of 20 trillion yen as possible,'' the bank said in a statement. //www.quote.bloomberg.com