* No new action seen, policy decision expected 0230-0500 GMT
* BOJ may extend special loan facilities beyond March expiry
* BOJ to maintain view economy recovering moderately
* Governor Kuroda to brief media at 0630 GMT
By Leika Kihara
TOKYO, Feb 18 The Bank of Japan is expected to
keep monetary policy steady on Tuesday and maintain its upbeat
view on the economy, unfazed by recent signs of slower growth
and suggesting that any additional stimulus will be some time
Data on Monday showing the world's third-largest economy
grew much slower than expected in the fourth quarter underscored
the challenge of ending nearly two decades of stagnation.
It also may heighten pressure on the BOJ in coming months to
do more to bolster the economy, analysts say.
But the central bank is likely to stick to its view that
growth will accelerate in the first quarter as consumers rush to
beat a sales tax hike in April, and that it can weather any
subsequent decline in household spending from the higher tax
without additional stimulus.
With the yen and Japanese stock prices also having calmed
down after the latest emerging market rout, the BOJ also sees
little need to use its depleted policy arsenal now.
"I don't think the BOJ will adopt additional easing steps as
domestic demand is strong and prices are steadily increasing,
and as long as the markets are stable," said Yoshiki Shike,
chief economist at Dai-ichi Life Research Institute in Tokyo.
The central bank is widely expected to maintain its pledge
of increasing base money, its key monetary policy gauge, at an
annual pace of 60-70 trillion yen ($589-$687 billion).
It may also extend special loan facilities, cobbled together
between 2010 and 2012 as a way to drive funds through the
banking sector to borrowers, beyond their expiry date of March
by at least a year.
Markets will focus on whether Governor Haruhiko Kuroda will
stick to his view, offered last month, that no further easing
was needed now with prices rising steadily and overseas
The BOJ has stood pat since launching an intense burst of
stimulus last April, when it pledged to accelerate inflation to
2 percent in roughly two years via aggressive asset purchases in
a country mired in deflation for 15 years.
Some Japanese policymakers have worried the market
turbulence earlier this month, which boosted the safe-haven yen
and drove down Tokyo share prices, could undermine the positive
momentum generated by the stimulus.
The soft fourth-quarter GDP data may also play into the
hands of some pessimists in the nine-member board, who fret the
April tax hike may hurt household spending more than expected or
that U.S. growth may not prove strong enough to make up for weak
demand for Japanese goods in emerging Asian markets.
Still, mainstream members of the board, such as Kuroda and
his two deputy governors, have argued that temporary speed bumps
in the economy won't be enough to justify further easing.
The BOJ policymakers will likely scrutinise how the April
tax hike and the uncertain global outlook, which has kept export
growth disappointingly slow, will affect prospects for meeting
their 2 percent price target.