Japan interest rate to remain at 2008 level
By Yuri Kageyama |
August 11, 2010, Wednesday
|
Print Edition
Print Edition
JAPAN'S central bank kept its benchmark interest rate unchanged yesterday, acknowledging worries about falling prices and other risks to the nation's economic recovery.
The Bank of Japan's policy board decided unanimously at the end of a two-day meeting that it will keep the overnight call rate at 0.1 percent. The rate hasn't changed since December 2008.
The bank said the world's No. 2 economy showed some signs of recovery on the back of an overseas turnaround with exports and increasing production. But it acknowledged Japan was still fighting continually declining prices.
Also weighing on the economy is the surging yen, which erodes the value of overseas earnings for Japanese exporters, a key part of the economy. The dollar has been trading at 85 yen levels, which is close to a 15-year high for the Japanese currency.
"The bank's baseline scenario projects that the economy is likely to be on a recovery trend," the bank said. "The bank recognizes that Japan's economy faces the critical challenge of overcoming deflation and returning to a sustainable growth path with price stability."
Hiroshi Watanabe, economist at Daiwa Institute of Research in Tokyo, said the bank avoided a direct reference to the dangers of the surging yen as it can do little to reverse the currency's strength.
The Bank of Japan's policy board decided unanimously at the end of a two-day meeting that it will keep the overnight call rate at 0.1 percent. The rate hasn't changed since December 2008.
The bank said the world's No. 2 economy showed some signs of recovery on the back of an overseas turnaround with exports and increasing production. But it acknowledged Japan was still fighting continually declining prices.
Also weighing on the economy is the surging yen, which erodes the value of overseas earnings for Japanese exporters, a key part of the economy. The dollar has been trading at 85 yen levels, which is close to a 15-year high for the Japanese currency.
"The bank's baseline scenario projects that the economy is likely to be on a recovery trend," the bank said. "The bank recognizes that Japan's economy faces the critical challenge of overcoming deflation and returning to a sustainable growth path with price stability."
Hiroshi Watanabe, economist at Daiwa Institute of Research in Tokyo, said the bank avoided a direct reference to the dangers of the surging yen as it can do little to reverse the currency's strength.
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