BOJ likely to hold extra policy meeting early next week

TOKYO, Aug. 28 Kyodo -
The Bank of Japan is considering holding an extraordinary policy meeting early
next week to discuss further monetary easing that would help stem the yen's
recent sharp rise, sources close to the matter said Saturday.
By holding an emergency meeting before its regular session scheduled on Sept. 6
and 7, the central bank could show its stance on cooperating with the
government to address the yen's appreciation and the country's economic
slowdown, the sources said. Prime Minister Naoto Kan says he will outline fresh
fiscal stimulus by Tuesday.
Kan said Friday he will meet with BOJ Governor Masaaki Shirakawa after
Shirakawa returns to Japan on Monday from the United States, where he attended
an annual symposium sponsored by the U.S. Federal Reserve.
The BOJ Policy Board last held such an extra session in May, when the bank's
decision-making body decided to restart supplying dollar funds to the Tokyo
money market at the height of the sovereign debt crisis in Greece.
This time, the BOJ could determine, among other options, to expand one of its
lending programs, which is currently designed to provide 20 trillion yen as
three-month loans to financial institutions at its policy interest rate of 0.1
percent, the sources said. The bank could increase the amount to 30 trillion
yen and extend the lending period to six months.
While the BOJ has been under growing pressure from lawmakers to further ease
its monetary policy and boost the Japanese economy, its policymakers may also
discuss lowering its target rate of overnight call money to 0.05 percent from
the current 0.1 percent and injecting more liquidity into the economy by
increasing the purchases of government bonds and other assets.
The U.S. dollar has been trading around 84 to 85 yen after falling to a
15-year-low of 83.58 yen on Tuesday. The euro also touched its lowest point in
nearly nine years against the Japanese currency.
A stronger yen makes Japanese exports less competitive.
Tokyo stocks went through a rough week with export-oriented issues such as auto
and high-tech leading the overall decline. The benchmark Nikkei 225 index ended
Friday below the psychologically important 9,000 yen line.
The government has been struggling to ease such market volatility.
On Friday, Kan said Japan will take ''decisive action'' when it proves
necessary, his strongest comment aimed at stemming the yen's advance since he
assumed office in June.
His remarks were widely interpreted as suggesting the possibility of Japan's
first currency market intervention in over six year.
The Democratic Party of Japan announced Thursday a set of proposals, with its
policy chief urging the BOJ to cooperate with the government in taking swift
emergency steps to address the current economic hardship.
In response to the proposals from the ruling party, Kan is expected to present
the outline of fresh fiscal stimulus by Tuesday, focusing on creating jobs and
encouraging consumer and business spending.
==Kyodo