[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Thursday, 16 November 2006, 07:22 GMT
Japan interest rates kept on hold
Japanese production line worker
Japanese economic growth could fuel a further interest rate rise
The Bank of Japan has kept interest rates on hold at 0.25%, as policymakers take stock of the pace of recovery in the world's second-largest economy.

The bank's nine-member policy board voted unanimously to freeze rate, a move widely expected by economists.

The central bank ended its five-year policy of keeping base rates at zero in July, in a bid to stimulate growth.

Japan's economy grew more strongly than expected in the third quarter, but consumer demand has remained sluggish.

Last week, the government reported that machinery orders - a key gauge of corporate spending - had fallen by 7.4% in September from the previous month.

Bottom line

Despite the mixed economic signals, many analysts are anticipating a further rise in Japanese rates in the coming months.

"It would not be a surprise if it moves to hike rates before the end of this year," said Tatsushi Shikano, senior economist at Mitsubishi UFJ Research and Consulting.

Bank of Japan governor Toshihiko Fukui has himself suggested that a gradual rise in interest rates would be unlikely to harm the country's recovery.

"The bottom line is that the GDP data gave the Bank of Japan more freedom to choose the date of its next rate hike," said Masaaki Kanno, chief economist at JP Morgan Securities.




SEE ALSO
Japanese growth beats forecasts
14 Nov 06 |  Business
Japan economy concerns hit shares
10 Nov 06 |  Business
Bank of Japan hints at rate raise
07 Nov 06 |  Business
Fresh wobble for Japan's economy
31 Oct 06 |  Business
Japanese industrial output slows
30 Oct 06 |  Business
Japan may raise rates by year end
13 Sep 06 |  Business
Japan pegs interest rate at 0.25%
11 Aug 06 |  Business

RELATED INTERNET LINKS
The BBC is not responsible for the content of external internet sites



FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

PRODUCTS & SERVICES

Americas Africa Europe Middle East South Asia Asia Pacific