TOKYO, April 27 (Reuters) - The Bank of Japan eased monetary policy on Friday by expanding government bond purchases by 10 trillion yen ($123.8 billion), showing its determination to achieve its new 1 percent inflation target.
But the central bank reduced by 5 trillion yen a pool of funds set aside for fixed-rate market operations, reducing it to 30 trillion yen.
Combined with the increase in a separate fund for asset purchases, the total size of the BOJ’s asset buying and loan programme was increased by 5 trillion yen to 70 trillion yen.
The BOJ increased by a small amount purchases of exchange-traded funds and trust funds investing in property, while extending the duration of government and corporate bonds it targets under the scheme to three years from the current two years.
As widely expected, the BOJ maintained its key policy rate at a range of zero to 0.1 percent by a unanimous vote.
The central bank will release its twice-yearly outlook report, which serves as a basis for monetary policy decisions and includes revised long-term economic and price forecasts, at 3 p.m. (0600 GMT).
Governor Masaaki Shirakawa will hold an embargoed news conference with his comments to come out sometime after 4:15 p.m. (0715 GMT).
The central bank has been standing pat on monetary policy since February, when it surprised markets by expanding asset purchases and setting a 1 percent inflation target. Markets had widely expected it to ease policy on Friday via an increase in its asset buying programme.