TOKYO A day before the Central Bank's Policy Board meets, Bank of Japan (BOJ) Governor Masaru Hayami on Tuesday defied persistent pressure to do more to aid the fragile economy by ruling out a further relaxation of monetary policy.

Hayami intoned his mantra that the BOJ should stay clear of radical steps such as boosting the money supply by expanding its outright buying of long-term government bonds or setting an inflation target to end a two-year trend of falling prices.

"I do not think further easing is necessary at present," Hayami told a parliamentary committee.

"But we will keep watching domestic prices, share prices and moves in the economy to make sure we make the right policy steps," he added.

With the economy still in tatters and supportive fiscal measures widely believed to be exhausted, pressure has been growing on the BOJ to come up with more credit-loosening steps to help secure a self-sustained recovery.

Such pressure has been especially strong from lawmakers in the ruling coalition who want to repair their sinking popularity by boosting the economy ahead of an Upper House election in July.

Earlier in the day, Japanese Trade Minister Takeo Hiranuma added his voice to the chorus of calls for further easing.

"In order to put the Japanese economy on a stable recovery path, we need a monetary policy approach," Hiranuma, the minister of economy, trade and industry, told a news conference.

"The Bank of Japan should consider easing steps, including quantitative easing," he said, adding that the economy was still on a mild recovery trend but was leveling out.

Quantitative easing is jargon for pumping up the money supply to meet a target such as growth in banks' reserves held at the Central Bank, which determine the pace of credit growth.

Hiranuma's proposal was more specific than one last week when he merely called for the BOJ to take "appropriate and flexible" monetary steps.

(Reuter)