The Bank of Japan (BOJ) kept its monetary policy unchanged as expected on Thursday, taking heart from recent data that showed the economy growing at its fastest pace in 13 years. The BOJ said it decided by a unanimous vote to keep its target volume for current account deposits parked at the BOJ at 30-35 trillion yen ($275-321 billion), as decided at its January meeting. But the BOJ said it would consider a facility under which it would provide Japanese government bonds which it holds to the market in order to improve liquidity.
"At the monetary policy meeting today, views were expressed that the bank could contribute to enhancing liquidity and maintaining the smooth functioning of government securities markets through introducing a facility which provides a temporary and secondary source of government securities to the markets," it said in a statement. Current account deposits comprise bank reserves and reserves put up by other financial institutions such as brokerages. The target is used as a benchmark for the amount of liquidity in the banking system. The central bank reiterated it was ready to provide funds regardless of the target if risks to financial system stability emerged. The BOJ has pledged to maintain its quantitative easing policy until year-on-year changes in the consumer price index stabilise at or above zero percent. ($1=108.92 Yen)//