BOJ expected to keep loose monetary policy to boost economy.
(EDS: TO BE UPDATED)
The Bank of Japan will wrap up its two-day policy meeting Wednesday, with financial market participants expecting the central bank to maintain its ultra-loose monetary policy to boost the country's economy, which has struggled amid the rising yen and the uncertain global economic outlook.
The BOJ's Policy Board may downgrade its basic assessment of the Japanese economy, some analysts said, after its Tankan survey showed last week that business confidence among large manufacturers deteriorated in December from three months earlier.
The nine-member board is expected to keep the bank's key short-term interest rate steady at around zero to 0.1 percent while maintaining the 20-trillion yen asset-purchase fund and 35 trillion yen low-rate fund provision program to encourage financial institutions to lend money to businesses.
In November, the BOJ said Japan's economy ''has continued picking up, but at a more moderate pace mainly due to effects of a slowdown in overseas economies,'' an assessment downwardly revised from October.
The board could further lower the view, given the weakening confidence of such large manufacturers as carmakers and high-tech firms, toiling under the stronger yen, which pares their profits from exports when repatriated.
The Tankan index for their sentiment dropped faster than expected to minus 4 this month from September's plus 2, also affected by the recent mass flooding in Thailand that has disrupted production by Japanese manufacturers in the hub country of Southeast Asia, as well as by fears of slower global economic growth amid the sovereign debt crisis in Europe.