Bank of Japan keeps interest rate near zero
Wednesday, December 21, 2011
TOKYO (AP) — Japan’s central bank left its key interest rate unchanged at virtually zero as it downgraded its assessment of the world’s third-biggest economy.
In a widely expected decision, the Bank of Japan’s nine-member policy board voted unanimously Wednesday to keep the overnight call rate target between 0 and 0.1 percent.
It said in its statement that economic growth “has paused, mainly due to the effects of a slowdown in overseas economies and of the appreciation of the yen.”
The central bank noted potential risks from Europe’s debt crisis and a sluggish U.S. economy.
“The sovereign debt problem in Europe could result in weaker growth not only in the European economy but also in the global economy particularly through its effects on global financial markets,” the Bank of Japan said.
Trade data released earlier in the day showed that exports fell 4.5 percent from a year earlier in the second straight month of contraction. The decline was particularly pronounced in shipments to Europe.
Board members also said business sentiment has deteriorated overall, as revealed by the central bank’s quarterly “tankan” survey released last week. Confidence at major Japanese manufacturers fell over the last quarter, with companies wrestling with a strong yen and a faltering global economy.
The Bank of Japan maintained its view that Japan’s economy would eventually return to moderate growth. But for the time being, the economy would remain flat.
The central bank pledged to leave interest rates at virtually zero until prices stabilize from a prolonged period of deflation.
It said it is steadily buying financial assets through a fund it has repeatedly expanded in an effort to further loosen monetary policy.