Mr. Masaaki Shirakawa the governor of the Bank of Japan said today in the bank's quarterly meeting of regional branch managers, that the BOJ will keep its loose monetary policy to fight deflation and support economic recovery. Shirakawa added that it is a crucial challenge for the BOJ to defeat deflation and return to a sustainable growth path alongside stability in prices.

However, Shirakawa ensured that the Japanese economy is picking up, but there is not sufficient momentum to support domestic private demand. The BOJ kept interest rates unchanged in December to remain at 0.10%, and policy makers said that borrowing costs won't be raised till inflation is back.