Log In | Register
TOKYO — Japan's central bank kept its benchmark interest rate steady amid signs that the country's economic picture may be brightening.
The Bank of Japan's eight-member policy board voted unanimously Thursday to leave the overnight call rate target unchanged at 0.1 percent, as widely expected.
Separately, the bank said in its semiannual economic outlook report that it expects Japan's economy to shrink 3.1 percent this year, more than the 2 percent contraction projected in January.
Earlier Thursday, fresh economic figures revealed that Japan's struggling manufacturers are showing signs of life. After tumbling sharply since last year, industrial output edged up 1.6 percent in March from February — the first increase in six months. Production is also projected to rise in April and May.
It was much-needed good news for an economy that has been pummeled by a debilitating global slowdown and is now in the midst of its steepest recession since World War II.
With interest rates close to zero, the central bank has little room to tweak regular monetary policy and has instead focused on less conventional measures to boost corporate financing. The central bank already buys commercial paper, corporate bonds and stocks from financial institutions to help shore up their balance sheets.
The BOJ has refrained from making any major policy announcements this month, suggesting that board members may be monitoring the latest economic cues before they decide what to do next.
"Economic conditions in Japan have deteriorated significantly," the central bank said in its economic report. "The outlook for Japan's economy from fiscal 2009 through fiscal 2010 is likely to greatly depend on developments in overseas economies and global financial markets."
The BOJ said a steady recovery of the world economy is still uncertain and that projections need to take into account process of the U.S. and European financial restructuring and the pace of recovery in the global demand.
Japan's interest rates are among the lowest of major economies. The Federal Reserve on Wednesday kept its targeted range between zero and 0.25 percent, while the European Central Bank's benchmark rate stands at 1.25 percent.
