“The Bank of Japan (8301) refrained from expanding monetary easing to counter deflation, resisting pressure from lawmakers who five days ago rejected a nominee for the policy board.
The central bank kept the key rate between zero and 0.1 percent in Tokyo today. It left its 30 trillion yen ($368 billion) asset-purchase fund and 35 trillion yen credit-lending program unchanged, in line with the forecasts of 12 of 13 economists surveyed by Bloomberg News.
The yen strengthened and stocks pared gains after the unanimous decision, the first since the upper house of parliament blocked the appointment of BNP Paribas SA economist Ryutaro Kono after some lawmakers said he wouldn’t support stronger measures. The central bank may be preserving its ammunition for later in the month, when its revised price projections are likely to show a goal of 1 percent inflation is not in sight.
“The BOJ held off on additional easing to show it isn’t willing to be pushed around by politicians,” said Junko Nishioka, a Tokyo-based analyst at RBS Securities Japan Ltd. who has worked for the central bank. “The BOJ will be under pressure to ease policy at its next board meeting because of its close-to-zero percent inflation outlook.”
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