The outstanding balance of current account deposits held by private financial institutions at the Bank of Japan slipped below the BOJ's liquidity target Thursday for the first time since a quantitative easing policy was adopted in March 2001.
The balance, which is a key gauge in the ultra-loose policy, stood at 29.13 trillion yen Thursday, down 2.23 trillion yen from Wednesday and lower than the liquidity target range of 30 trillion yen to 35 trillion yen.
Thursday's fall in the balance stems mainly from a vast shift of money in the current account deposits to state coffers as companies paid corporate taxes owed after balancing their books at the end of March.
The BOJ allowed the current account balance to fall below the liquidity target by not conducting money-market operations Thursday morning, which would have given it immediate fund injections.
The BOJ decided at its last policy-setting meeting on May 20 to allow temporary dips in its liquidity target, given weakening demand by banks for excess funds as the financial system became more stable.