The Bank of Japan (BOJ), the country 's central bank, is expected to lift its zero-interest policy for the first time since August 2000, local news said.

The bank started a two-day policy meeting from Thursday.

BOJ Governor Toshihiko Fukui, who are determined to make a policy change during the meeting, will probably propose a 0.25 percent hike in the overnight call rate on Friday, while more than half of the central bank's nine members on the Monetary Policy Board would vote for it, the daily Asahi Shimbun quoted insiders as saying.

Interest rates on deposits and housing loans would also be raised due to the policy change.

A series of economic data prompted the rate hike mull of the BOJ, which believe that there is little possibility of the economy falling back into deflation, sources said, adding that Fukui would also make it clear that the central bank will maintain a relatively easy monetary policy to support continued economic growth and are not hasty for subsequent rate hikes.

The Japanese government was initially cautious about an rate hike, citing continuing deflation of the economy. However many crucial Cabinet ministers, including Prime Minister Junichiro Koizumi, shifted their stands recently and supported the central bank to make a policy change at appropriate time.

Japan's zero-interest rate has been effective since March 2001, when the BOJ started to implement quantitative monetary easing policy.

Source: Xinhua