Economists agreed the BoJ's board meeting was certain to vote by a majority to maintain its current policy of guiding the key overnight rate virtually to zero. The board would also discuss the bank's monthly economic assessment, due out on Friday.

"The monthly economic assessment in March will be basically the same as in February, and the board will keep monetary policy unchanged," said Soichi Okuda, senior economist at Nippon Credit Bank.

But Okuda and other economists said there would be minor improvements in some areas in the central bank's assessment, such as on corporate investment in plant and equipment, on prices and on employment.

"Stock prices and foreign exchange rates have recently been stable, and that would make it easier for the BoJ to improve its assessment," said Hajime Takata, chief strategist at IBJ securities. And with these small improvements in the economic assessment to buoy them, BoJ members are expected to discuss how to end the year-old zero interest rate policy when the world's second largest economy finally succeeds in returning to a self-sustaining recovery.

Since it adopted the zero rate policy in February last year,the BoJ has said repeatedly it will maintain it until deflationary fears abate.

The NCB's Okuda said Japan's wholesale price index has indicated that deflationary concerns are gradually fading. WPI for January was down only 0.3 percent from the same month a year ago, BoJ data showed.

Okuda forecast that February WPI would be down 0.1 percent year-on-year. "Judging from WPI, deflationary fears are almost gone," Okuda said. BoJ board members have actually discussed the issue of halting the zero interest rate policy in past meetings. The minutes of the January 17 meeting showed one member said the policy was abnormal and a task for 2000 should be to end it.

-- (Reuters)