BOJ eases policy in split vote amid govt pressure

(For more stories on the Japanese economy, click [ID:nECONJP])

TOKYO, March 17 (Reuters) - The Bank of Japan eased monetary policy further on Wednesday as expected after a drumbeat of government pressure for fresh action to beat deflation, but the split vote suggests the board may have had difficulty justifying the move.

The central bank, in a 5-2 vote, decided to expand the scale of a fund supply tool it adopted in December to 20 trillion yen from 10 trillion yen, and the duration of the fixed-rate loans was left at three months. Board members Tadao Noda and Miyako Suda opposed the move.

The bank's main policy rate was kept on hold at 0.1 percent by a unanimous vote, as widely expected. The central bank also maintained its commitment to keep monetary conditions very easy and to do its utmost to beat deflation.

BOJ Governor Masaaki Shirakawa will hold an embargoed news conference later, with his comments expected to come out around 4:15 p.m. (0715 GMT).

The government, hobbled by a ballooning fiscal debt, has been pressuring the BOJ to support a fragile economy even as most other major central banks mull rolling back stimulus steps put in place during the global crisis.

The yield curve has steepened and the yen has weakened against the dollar since a newspaper report earlier this month fueled expectations that the BOJ will ease policy in March.

Under pressure from the government, the BOJ in December put in place a new fund-supply operation at which it extends a combined 10 trillion yen in three-month loans to banks at the policy rate of 0.1 percent. (Reporting by Leika Kihara; Editing by Hugh Lawson)