Instead, the central bank will rely on interest rates - a method similar to the Fed's approach before it turned to money-supply growth in the late 1970's.

Despite earlier easing, money-supply growth continues to lag.

The increase was the third in a row for the monetary aggregates, but analysts said that money-supply growth remained slow.

Japan's money-supply growth, running about 4 percent last year, has come down from 20 percent in the early 1970's and 9 percent in 1990.

The independent central bank had to slam the brakes on money-supply growth by raising interest rates, and business growth plummeted.

Their primary responsibility in setting interest rates is to control money-supply growth and limit inflation.

So far, the Federal Reserve has not tried to push interest rates down significantly to stimulate faster money-supply growth.

But no effort was made to hold down money-supply growth or to increase competition.

Monetarist economists long contended that the money-supply growth could affect the macroeconomy.

In central bank parlance, money-supply growth and expectations about inflation are the two "pillars" of monetary policy.