[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Thursday, 23 August 2007, 10:03 GMT 11:03 UK
Bank of Japan keeps rates on hold
Toyota's Auris car
Japan is reliant on a strong US economy for exports
The Bank of Japan has opted to keep its key interest rate unchanged at 0.5% for the sixth month in a row.

The move - favoured by eight out of the board's nine members - had been widely expected in the wake of recent turmoil in financial markets worldwide.

Board member Atsushi Mizuno was the only member who favoured raising rates.

While Japan's economy has been recovering, recent data has implied a slowdown. Analysts had feared a rate rise could hamper further growth.

In its monthly report which came out just after the rates decision, the Bank left its assessment of the economy unchanged, saying it continued to expand moderately - mainly driven by exports.

Meanwhile figures from the Finance Ministry released on Wednesday showed the trade surplus had shrunk - the first drop in nine months - resulting from higher fuel prices that had increased the cost of imports.

The country last raised rates in February from 0.25% - its first rise since July 2006.

A few weeks ago it had been expected that Japan would raise rates as early as August.

But with financial markets worldwide struggling from problems triggered by a crisis in the US mortgage sector, analysts began to expect that the Bank of Japan would keep rates on hold.

The combination of a weaker US economy - Japan's largest trading partner - and the stronger yen, which makes Japanese goods more expensive relative to other countries' products, both threaten to undermine Japan's recovery.


SEE ALSO
Cars drive Japan's trade surplus
25 Jul 07 |  Business
Japan's May exports lift surplus
21 Jun 07 |  Business
Business confidence 'up in Japan'
19 Jun 07 |  Business
Japan ups interest rates to 0.5%
21 Feb 07 |  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