Japan keeps its bank rate low | Shanghai Daily

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October 15, 2009

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Japan keeps its bank rate low

JAPAN'S central bank kept its key interest rate unchanged at 0.1 percent and upgraded its assessment of the world's No. 2 economy, citing improvements in manufacturing and exports.

Yesterday's unanimous and widely expected decision came at the end of the Bank of Japan's two-day policy board meeting. The central bank has kept its key rate unchanged at near zero since December, when it cut the rate from 0.3 percent, as it tries to nurture an economic recovery.

"Japan's economy has started to pick up," board members said in a statement. "Public investment has been increasing, and exports and production have also been rising against a backdrop of progress in inventory adjustments both at home and abroad as well as a recovery in overseas economies, especially emerging economies."

Japan eked out its first quarter of growth in the April-June period after a yearlong contraction, but unemployment remains near a record high and salaries have been falling.

The Bank of Japan did not make a decision on the future of emergency credit measures implemented earlier this year. With lending becoming easier for companies, analysts had expected board members to end or scale down the programs, including the bank's purchases of commercial paper and corporate bonds.

Board members said they expect the economy to gradually recover but highlighted major uncertainties in overseas economies and financial markets that could derail growth.

Japan's key consumer price index fell by a record 2.4 percent in August from a year earlier.




 

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