BOJ keeps ultra-loose monetary policy, boosting loan support

The Bank of Japan (BOJ) decided Tuesday to keep its ultra-loose monetary policy unchanged, while boosting loan support to encourage lending.

The Japanese economy "has continued to recover moderately," the BOJ said in a statement after a two-day policy meeting, maintaining its basic assessment of the world's third largest economy.

Its nine-member policy board decided unanimously that the ultra- loose monetary policy introduced in April 2013 to stimulate economic recovery would stay on.

It also decided to extend its special loan support fund program for one year to encourage banks to boost lending to businesses, bringing the maximum amount of fund provision to 7 trillion yen ( 68.4 billion U.S. dollars) from 3.5 trillion yen (34.2 billion dollars).

Under the loan support program set to expire in March, the BOJ has been supplying funding at an annual interest rate of 0.1 percent to commercial banks that increase lending to businesses with growth potential.

"The bank expects that these enhancements will further promote financial institutions' actions as well as stimulate firms' and households' demand for credit, with a view to encouraging banks' lending and strengthening the foundations for economic growth," the BOJ said.

The BOJ's decision came after the Japanese government said in a preliminary report Monday that the world's third largest economy grew by 1.0 percent in the last quarter of 2013 amid sluggish exports, falling short of market expectation for a 2.6 percent growth.