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BOJ's bullish stance meant to keep easing expectations in check

Side effects tie central bank's hands on further loosening as concerns grow

An industrial port in Tokyo. Declines in Japanese exports and production have stoked fears of a slowdown that could push the Bank of Japan to loosen monetary policy further.   © Reuters

TOKYO -- The relatively upbeat tone that Japan's central bank kept on the domestic economy on Friday was likely intended to quell hopes of additional easing given its limited room to maneuver.

The Bank of Japan maintained its diagnosis that the economy is "expanding moderately," leaving in place key measures such as guiding long-term interest rates to around zero, while at the same time citing sluggishness in exports and industrial production linked to slowdowns in China and Europe.

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