The stance of advanced industrial economies on monetary policy remained accommodative in 2004 financial year, the Bank for International Settlements (BIS) said in its annual report released on Monday.

With the US economic expansion continuing strongly and risks shifting towards possible inflationary pressures, the US Federal Reserve began reducing the degree of accommodation in a series of measured increases in the federal funds rate target, says the report.

The European Central Bank kept its policy rate unchanged as sub- par economic growth and the appreciation of the euro continued to hold back inflationary pressures, it adds.

The Bank of Japan held its policy rate at zero as economic and financial headwinds proved sufficiently strong to rule out an end to deflation, according to the report.

And policies across smaller industrial economies with inflation targets were more differentiated, with some central banks choosing very accommodative policy stances while others moved to more neutral settings, says the report.

It also says that the 2004 financial year was dominated by external developments, especially movements in the prices of oil and other commodities.

The Basel-based BIS is an international organization which fosters international monetary and financial cooperation and serves as a bank for central banks.

Established in May 1930, the BIS is the world's oldest international financial organization.

Source: Xinhua