On Tuesday, the Bank of Japan continued its widely recognized monetary easing program, fueling growing rumors that it may abandon its ultra-loose policy.

Following a two-day policy meeting, the board opted to maintain interest rates in negative territory, which is a global aberration that has caused the value of the yen to appreciate against the dollar. The rate band for 10-year government bond rates will remain intact as well.

Analysts had predicted the BoJ would stand pat, partly to avoid further disruption after an earthquake on New Year's Day killed at least 233 people in central Japan.

But Governor Kazuo Ueda is eventually expected to move away from the bank's long-standing ultra-loose policies that economists see as unsustainable.

"As a virtuous cycle from income to spending gradually intensifies, Japan's economy is projected to continue growing at a pace above its potential growth rate," the BoJ said.

Even so, "there are extremely high uncertainties surrounding Japan's economic activity and prices", it added.

"The bank will patiently continue with monetary easing while nimbly responding to developments in economic activity and prices as well as financial conditions."

Decision-makers have stood firm to the measures, even as inflation rises and other central banks tightened monetary policy since 2022 as they tried to rein in runaway prices.

Japan's inflation, excluding fresh food, slowed again in December to 2.3 percent, figures showed Friday.

But the BoJ sees the increases as driven by temporary factors including higher energy costs, and on Tuesday it revised down its inflation forecast for the next fiscal year to 2.4 percent from 2.8 percent.

The bank in April launched a review of its "non-traditional" attempts to end the deflation that has plagued Japan since the 1990s.

And policymakers have for several months hinted that they could be willing to change direction, including by making minor tweaks to their yield curve control programme that keeps a grip on bonds.

Timing is everything, however -- with Ueda facing pressure to normalise while minimising any economic shocks.

The bank wants to achieve two percent inflation stably, so "it's not the right time (to normalise policy), because Japanese consumption is so weak" and wage rises are low in real terms, former BoJ board member Sayuri Shirai told AFP.

It is still preferable to adopt normalization this year, according to Shirai, an economics professor at Keio University, "if the BoJ wants to do so regardless of the sustainability of the two percent target."

Before the announcement on Tuesday, SuMi TRUST senior strategist Katsutoshi Inadome stated that the bank will probably "only change policy tentatively and in stages".

It's also possible that the impact of the January 1 earthquake, which destroyed portions of the isolated Noto Peninsula, caused bank authorities to reconsider this time.

"Until the damage and economic impact of the Noto earthquake are assessed, it is difficult for the BoJ to change its policy," Inadome said.

End//voice7news.tv