"Such conduct of monetary policy will support the positive movements in economic activity and financial markets, contribute to a rise in inflation expectations, and lead Japan's economy to overcome deflation that has lasted for nearly 15 years, " the bank said in its policy statement.

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The government promises businesses support but no interference - a policy of "positive non-interventionism" vital to its role as a financial and trading center.

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State-owned banks still dominate the financial sector and are kept profitable by a positive spread between loan and deposit rates dictated by government policy.

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