The Bank of Japan said the nine members of its policy board voted unanimously to guide the overnight call rate, in effect, at zero until its next meeting on April 28. On March 9, the central bank, in the belief that the economy has overcome deflation, ended its policy of flooding the banking system with excess funds, reverting to a conventional overnight call rate. The previous policy required financial institutions to park 30-35 trln yen in current account deposits at the central bank, well above the level of 6 trln yen required by law In adopting its new policy, the Bank of Japan said it will cut the current account reserve target to the level required by law "over a period of a few months." To this end, it had reduced the outstanding balance of current account deposits held by banks to 26.95 trln yen by the end of last week. Analysts said the market is now focussing on when the central bank will end its zero interest policy, amid signs that the economy has, indeed, beaten deflation. The government announced that the core consumer price index (CPI), which excludes volatile prices of fresh food but includes energy costs, increased 0.5 pct in February from a year earlier, rising for the fourth straight month. "The pace of the recent reduction in the current account balance is in line with our expectation that the Bank of Japan will reduce it to 20 trln yen by end-April, to 10 trln yen by end-May and then to 7-8 trln yen by the end of June," said JP Morgan Securities chief economist Masaaki Kanno "The Bank of Japan will then maintain the minimum current account balance for some time before announcing the end of the zero interest policy in, at the earliest, July or, more likely, in August, unless the macro-economic data indicate unexpected weakness," he said. Kazuhito Uchida, senior economist at Bank of Tokyo Mitsubishi UFJ, also expects the present policy to be ended either at the policy board meeting in July or the meeting in August. One of the results of the March Tankan survey of business sentiment is that the labor diffusion index, which measures the number of companies that believe they have excess workers minus those that believe they have too few, stood at minus 1 among large manufacturers, down from plus 2 in December, meaning there is an increasing need to hire more workers. "As the latest Tankan suggested that the economic recovery will be sustained, as Japanese companies no longer hesitate to hire more workers and spend more on investments, the Bank of Japan may end the zero interest policy around summer," Uchida said.