BOJ keeps policy steady, upgrades view of economy

TOKYO (REUTERS) - The Bank of Japan (BOJ) on Tuesday kept monetary policy steady and revised up its assessment of the economy, unfazed by recent market turbulence which has yet to inflict severe damage on a gradually improving economy.

As widely expected, the central bank voted unanimously to maintain its pledge of increasing base money, or cash and deposits at the BOJ, at an annual pace of 60 trillion to 70 trillion yen (S$765-890 billion).

"Japan's economy is picking up," the BOJ said in a statement, revising up its view from last month, when it said the economy was starting to pick up.

BOJ board member Takahide Kiuchi proposed that the central bank make its 2 per cent inflation target a medium- to long-term goal, and commit to intensive easing in the next two years. This would differ from the BOJ's current commitment to hit its inflation target within two years.

Mr Kiuchi's proposal was rejected in an 8-1 vote.

The BOJ offered the world's most intense burst of stimulus on April 4, pledging to double the supply of money in two years by boosting purchases of government bonds and risk assets.

In doing so, it switched its policy target from the overnight call rate to base money, a broad measurement of the amount of money the central bank pumps into the economy.

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