* Policy rate held at 0-0.1 pct, holds off on easing
* Loan scheme launched for banks in quake-hit northeast
* BOJ cuts economic assessment, says under strong pressure
* Supply chain disruptions will be solved by July -Shirakawa (Adds details, background)
By Leika Kihara
TOKYO, April 7 (Reuters) - The Bank of Japan on Thursday offered 1 trillion yen (${esc.dollar}12 billion) in ultra-cheap loans to banks in areas devastated by last month's earthquake but held off on more aggressive policy easing, saying it needed more time to assess the extent of the economic damage.
As expected, the central bank cut its assessment of the economy in the wake of the March 11 disaster, saying it would remain under "strong, downward pressure" for some time, but added it was ready to ease policy further if needed.
The government has estimated the direct damage from the quake and ensuing tsunami at some ${esc.dollar}300 billion, not including the cost of lost production from factories which were forced to shut due to widespread power outages.
Though many plants have been brought back online, rolling power blackouts and shortages of essential parts are expected to persist into summer, and workers are still battling to contain radiation at a damaged nuclear power complex northeast of Tokyo.
Having just loosened policy by expanding an asset-purchase programme in the days following the disaster, the BOJ instead focused on Thursday on meeting immediate funding needs in the quake-hit areas.
The BOJ said it would offer 1 trillion yen (${esc.dollar}11.7 billion) in one-year loans at 0.1 percent interest to financial institutions beginning in May to help spur reconstruction.
"At this point, the BOJ doesn't have enough hard economic data to assess the impact of the quake. But I think the BOJ will have enough information by the time of its next meeting," said Naomi Hasegawa, senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities in Tokyo.
As widely expected, the BOJ kept interest rates unchanged at a range of zero to 0.1 percent by a unanimous vote, and stressed its resolve to keep monetary conditions extremely loose.
The BOJ's stance is in stark contrast with the European Central Bank, which was expected to raise rates later on Thursday to curb inflationary pressures, and the Federal Reserve, which markets see as increasingly moving toward tightening as the U.S. economic recovery gains momentum.
The divergence in direction of monetary policy helped push the dollar as high as 85.54 yen on Thursday, almost 10 yen above its record low of 76.25 yen hit days after the quake.
WORST CRISIS IN DECADES
Japan is facing its worst crisis since World War Two after the 9.0 magnitude earthquake and a tsunami towering more than 10 metres battered its northeast coast.
Many analysts expect the world's third-largest economy to slide back into recession for a few quarters but see moderate growth later in the year and into 2012 as reconstruction efforts gather pace.
BOJ Governor Masaaki Shirakawa said he expected supply chain disruptions to be resolved around June or July.
"Once supply constraints are resolved, export rises backed by strong growth in global economies will clearly serve as a driver to support Japan's economy," Shirakawa told a news conference after the policy meeting.
While the loan scheme's impact on the overall economy may be limited, it will help banks in the area such as Tohoku Bank , Toho Bank , Bank of Iwate and 77 Bank .
The BOJ will work out details of the plan by the next rate review on April 28 and hopes to start extending loans in May.
While loss estimates are still sketchy, BOJ officials say the damage so far appears to be within what the central bank had expected when it decided to extend its asset-buying plan three weeks ago.
The BOJ's semiannual outlook report on April 28 could serve as a prompt for additional policy easing. It is likely to cut its economic forecasts sharply.
"Things are still very uncertain. We still don't have economic data for March, so it's difficult for the BOJ to judge how much the economy was hurt. It makes sense to me for the BOJ to do what it did today and then analyse the data for March," said Yasuo Yamamoto, senior economist at Mizuho Research Institute in Tokyo.
"Additional easing is likely, but we're still at the stage where the BOJ has to gather information."
Some analysts warn the ultimate cost of the disaster could be far higher than the government's ${esc.dollar}300 billion estimate. [ID:nL3E7F10XI]
In the auto sector, a key driver of Japan's economy, lost production in Japan in the two weeks after the quake included hundreds of thousands of vehicles.
The BOJ says it will not hesitate to act if downside risks to growth materialises. But it also wants to carefully wait for the best timing to use its limited options to help the economy, having already nudged interest rates virtually to zero and taken on a huge amount of risky assets such as trust funds investing in stocks and property.
With Japan's huge debt pile, the government is also constrained in offering further fiscal stimulus. That could result in more political pressure on the central bank in coming months to take further action as the government prepares extra budgets for disaster relief and reconstruction.
Japan looks set to form an initial supplementary budget worth a bigger-than-expected 4 trillion yen for relief efforts. [ID:nnL3E7F71AE]
Calls from some lawmakers for the government to issue bonds for disaster relief, and for the BOJ to underwrite them, have been quickly dismissed by finance and economic ministers amid some concerns that a rush of new supply could worry longer-term investors in government bonds.
But Economics Minister Kaoru Yosano on Tuesday signalled the government might ask the BOJ for help in the future when its focus shifts to reconstruction from immediate disaster relief.
"The BOJ's next step will likely be to increase the amount of its outright JGB buying and it will probably be announced in June, when the government is seen compiling the second supplemental budget for the disaster," said Susumu Kato, chief economist at Credit Agricole Securities in Tokyo. (${esc.dollar}1 = 84.900 Japanese Yen) (Additional reporting by Rie Ishiguro; Editing by Edmund Klamann & Kim Coghill)
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