TOKYO (MNI) - The Bank of Japan's decision on Monday to inject cash into the banking system at a super-low overnight rate for six-month funding follows an unusually specific call from Prime Minister Naoto Kan to conduct "flexible" monetary policy.

The BOJ's decision made at a hurriedly called extraordinary policy board meeting also comes on the eve of the government's plan to announce on Tuesday the framework for its new fiscal stimulus package focused on creating jobs and easing the pain of a rapid rise in the yen inflicted on export-oriented small businesses.

TOKYO (MNI) - The Bank of Japan is under pressure from the government to ease policy further to help weaken the yen but so far has resisted, since it has yet to see evidence that the yen has tipped the balance of economic risks toward the downside.

Market News International understands that government officials want the BOJ to take action now to guide the yen to a weaker level, such as adding more liquidity into financial markets under quantitative easing, which could send market interest rates even lower as compared with dollar interest rates.

TOKYO (MNI) - Facing growing but balanced upside and downside risks to a sustained economic recovery, Bank of Japan policymakers will stay on course with their super-stimulative monetary policy well into next year.

Despite some softer data for April and May, BOJ officials are confident that consumer spending will continue recovering on improving wages and job offers after consumption has been propped up by purchases of durables goods (cars, flat-screen TVs, air conditioners, computers, etc.), thanks to the government's extended stimulus measures.

TOKYO (MNI) - Before providing an update to its medium-term growth and inflation outlook next month, the Bank of Japan leadership is keeping a cautiously optimistic economic recovery scenario, seeking to alleviate fears of a contagion from European financial turmoil.

BOJ Governor Masaaki Shirakawa said on Tuesday that Japanese exports to emerging countries are becoming even stronger, indicating that the backbone of sustainable economic recovery remains intact despite threats of a deeper European financial crisis.

By Max Sato

TOKYO (MNI) - The Japanese government on Monday left its overall assessment of the economy unchanged, saying it is "picking up steadily," contrasting with the Bank of Japan's upgrade of its own view to a "recovery" stage on Friday.

Despite an improvement in various data ranging from business investment and consumer spending to wages and jobs, the government stopped short of saying that the economy is recovering.

The difference comes from two major factors.

TOKYO (MNI) - A week after Bank of Japan Governor Masaaki Shirakawa said he saw no need to conduct further credit-easing at this point, the BOJ has moved after global stock markets plunged on growing fears that the Greek fiscal crisis will spread to other parts of Europe.

To quell any concerns about funding, the BOJ pumped cash into the money market on Monday via a rare same-day settlement operation for the second business day in a row, keeping the overnight lending among commercial banks around its target of 0.1%.

TOKYO (MNI) - Bank of Japan policymakers have confirmed that the economy is moving along the path they have predicted but they are leaving their final decision on whether an uptick in domestic and global economic data warrant an upward revision to their standard growth scenario.