March 15 (Bloomberg) -- Japan’s money markets will show little reaction to a potential increase in stimulus measures by the Bank of Japan this week, according to Central Tanshi Co. The BOJ may seek at a policy meeting on March 16-17 to counter a contraction in its balance sheet caused by the month- end expiration of an emergency-credit program. Its options include expanding a 10 trillion yen ($110 billion) fund providing loans to banks, according to two central bank officials who spoke on condition of anonymity. “The Bank of Japan’s biggest purpose is to make an announcement to the government, as well as to the currency and stock markets,” said Shinsuke Kanabu, a research director at Central Tanshi, a Tokyo-based money market dealer and broker. An increase of 10 trillion yen “will barely raise the total amount of cash added to the banking system.” Current-account deposits held by financial institutions at the central bank have barely increased since the introduction of the 10 trillion yen program on Dec. 1. The balance of current-account deposits is currently at about 13 trillion yen, compared with an average of 12.3 trillion yen in the three months prior to the launch of the facility. The Bank of Japan will likely restrain a sharp increase in cash injections, since short-term rates are already close to 0.1 percent, the central bank’s target for overnight lending rates, according to Kanabu. Yields on discount bills from three- to 12-month maturities are now between 0.12 percent and 0.13 percent, according to Bloomberg data. To contact the reporter on this story: Saburo Funabiki in Tokyo at sfunabiki@bloomberg.net.

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