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BOJ holds off on new monetary easing as tax hike approaches

TOKYO--The Bank of Japan (BOJ) held off fresh monetary easing measures Tuesday, saying the economy was picking up, despite slowing growth in the last quarter of 2013 and fears that a looming tax hike will dent the recovery.

The head of the central bank also indicated he was confident it would achieve its inflation targets by the end of next year but policy makers sounded a warning over exports.

“Japan's economy has continued to recover moderately,” the bank said in a statement after a two-day policy meeting, adding that spending had jumped ahead of the tax rise.

“The pick-up in business fixed investment has become increasingly evident as corporate profits have improved ... Housing investment has continued to increase and private consumption has remained resilient.”

The dollar weakened slightly to 103.22 yen in afternoon trade from 103.28 yen before the announcement.

Bank governor Haruhiko Kuroda said a 2.0 percent inflation target, aimed at reversing years of deflation, was drawing closer.

“The consumer price index is steadily following a path toward (the target), so we don't see the need to make a policy adjustment at this time,” he told a press briefing.

Recent data showed consumer prices logged their first annual rise for five years in 2013.

The bank aims to achieve its target by the end of next year but there is growing scepticism among analysts and even some BOJ board members about that ambitious timeline.

'Further easing will be required'

Analysts had widely expected the bank to stand pat Tuesday as its easing program ripples through the economy, but were watching for signs from Kuroda of future policy moves.

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