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Japan Central Bank Keeps Key Interest Rate Steady

Tuesday, 07 Sep 2010 07:21 AM

Japan's central bank voted to keep interest rates near zero, holding off on further measures to tackle a strong yen that is undermining the country's fragile economic recovery.

In an unanimous decision, the Bank of Japan's nine-member policy board decided Tuesday to maintain its key interest rate at 0.1 percent, as widely expected. The central bank has not changed the overnight call rate since December 2008.

The central bank maintained its assessment of the economy, saying it shows "further signs of a moderate recovery" but acknowledged growing headwinds.

"Against the backdrop of increased uncertainty about the future, especially for the U.S. economy, and associated instability in the foreign exchange and stock markets, attention should be paid to downside risks to Japan's economy," it said in a statement.

The central bank's latest decision to do nothing follows an emergency meeting last week, when the central bank expanded a low-interest loan program to help contain the impact of the strong yen.

With Japan's export-driven economy facing an increasingly uncertain outlook, the BOJ has been under increasing political pressure to act. Sustained strength in the yen is toxic to vital exporters such as Toyota Motor Corp. and Sony Corp., eroding their international profits and making their goods less competitive abroad.

The move last week, however, generally underwhelmed markets and analysts, who criticized the loan expansion as too modest.

In its defense, the Bank of Japan said it has been "striving to pursue powerful monetary easing" and pledged to maintain an extremely easy financial environment.

"The bank will carefully examine the outlook for economic activity and prices, and, if judged necessary, take policy actions in a timely and appropriate manner."

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Japan's central bank voted to keep interest rates near zero, holding off on further measures to tackle a strong yen that is undermining the country's fragile economic recovery.In an unanimous decision, the Bank of Japan's nine-member policy board decided Tuesday to maintain...
AS,Japan,Central,Bank
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2010-21-07
Tuesday, 07 Sep 2010 07:21 AM
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