BOJ holds fire, defies easing calls
Increasing asset purchases is the most obvious option. Markets will now look to see how BOJ Governor Masaaki Shirakawa responds to the increased political heat and concerns over the central bank's independence when he holds a media briefing later in the day.
Japan's economy shrank 0.9 percent in the September quarter and given headwinds to growth in the current quarter, is widely expected to have slipped into a recession.
The BOJ maintained its assessment that the economy is weakening somewhat but warned that the persistent overseas slowdown was weighing on exports, output and business spending.
It also offered a slightly bleaker view on the outlook, saying the economy will remain weak for the time being before resuming a moderate recovery. In October, it had said economic growth will remain flat for the time being.
Abe, the leader of the Liberal Democratic Party (LDP), has called on the BOJ for bolder action, including unlimited easing, pushing rates to zero or below zero and directly underwriting bonds issued to fund public works spending. His comments have driven the yen to a near seven-month low against the dollar.
The BOJ is unlikely to give in to some of the extreme demands, such as underwriting debt, but is weighing options beyond its asset-buying programme, having cut policy rates effectively to
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