July 11 (Bloomberg) -- Japan's central bank will probably refrain from pouring more money into the economy next week as surging stock prices and rising exports ease pressure on policy makers to spur growth. The Bank of Japan will leave its purchases of government bonds from lenders unchanged at 1.2 trillion yen ($10.2 billion) a month and maintain the upper limit of reserves it makes available to lenders at 30 trillion yen, according to all 14 economists surveyed by Bloomberg News. Bond purchases have been the main policy tool since the bank cut rates almost to zero in March 2001.
A 14 percent gain in the Nikkei 225 Stock Average in the past month is erasing investment losses at Japanese banks, reducing the chances they will be forced to seek a government bailout, as Resona Holdings Inc. did in May. A record current account surplus adds to evidence Japan may dodge a fourth recession since 1991. ``The Bank of Japan's sense of crisis is ebbing,'' said Masuhisa Kobayashi, chief fixed-income strategist at Merrill Lynch Japan Securities. ``For now, the bank wants to watch how its recent policy actions are taking effect on the economy.''
Governor Toshihiko Fukui said this week he has no plans to increase bond purchases even though 10-year yields have more than doubled since touching a record low of 0.43 percent on June 11 as investors anticipated an economic revival. Rising yields threaten to push up borrowing costs and leave lenders with losses on their holdings. The No. 251 bond, which carries a 0.9 percent coupon and matures in 2013, rose 0.626 to 99.456 at 10:57 a.m. in Tokyo. The bond's yield fell 7 basis points to 0.960 percent. A basis point is 0.01 percentage point.
Time to Ponder
The central bank's nine-member board will meet for two days starting Monday and announce any policy decision Tuesday afternoon. Minutes of the meeting will be published on Aug. 13. In five of six meetings since he took charge of the central bank on March 20, Fukui has announced measures to shore up the stock market and prevent the world's second-largest economy from slipping into recession. The Nikkei lost 28 percent of its value in the year to March 31.
At his first meeting, Fukui boosted the amount of shares the bank buys from lenders by half to 3 trillion yen to help them limit stock losses. Last month he said the bank would buy 1 trillion yen of corporate debt to make it easier for small companies to borrow. He has also raised the reserves available to banks by almost half. ``In his first three months in office, Fukui took one action after another, but that period is ending,'' said Yasunari Ueno, chief market economist at Mizuho Securities Japan Ltd. ``From this point, he may try to take more time and ponder what to do while monitoring the direction of the economy and financial markets.''
Revival
Since policy makers last met on June 25, there has been plenty of evidence to suggest Japan's economy is reviving after growth slowed to 0.1 percent in the first quarter. Executives at large manufacturers in June were the least pessimistic in two years, the central bank's quarterly Tankan survey showed last week. Industrial production had its biggest gain in a year in May, and machinery orders, an early indicator of business investment, unexpectedly rose 6.5 percent. Japan's current account surplus widened to a record in May as exports rose, a government report showed yesterday.
Goldman, Sachs & Co. this week revised its projection of Japan's growth this year to 1.2 percent from a previous estimate of 1.1 percent. ``The uncertainty about the economy's outlook is easing,'' Fukui said in a speech in Osaka Monday. ``As we can see in a rise in stock prices, people are improving their view of the economy.''
Pressure May Mount
Finance Minister Masajuro Shiokawa, who often urged Fukui's predecessor, Masaru Hayami, to expand bond purchases, said the ministry has no plans to ask for policy action at the board meeting next week. Shiokawa and Fukui discussed the bond market Wednesday and agreed the recent rise in yields isn't a concern, Shiokawa told reporters. ``That's something the Bank of Japan should decide,'' Shiokawa told reporters today. ``The Ministry of Finance will not comment on it.''
Eight of 14 economists surveyed by Bloomberg News said the bank may pour more cash into the economy by the end of September. Four said the bank may have to increase monthly bond purchases by Sept. 30. ``If long-term rates continue to rise to an excessive level and that starts to hurt stocks, then the Bank of Japan would not hesitate to buy more bonds,'' said Ryutaro Kono, chief economist at BNP Paribas Securities Japan Ltd.//www.bloomberg.com