Page last updated at 10:24 GMT, Thursday, 19 February 2009

Japan opts to leave rates on hold

Bank of Japan Governor Masaaki Shirakawa
The bank's governor warned of tough times ahead

Japan's central bank has left its benchmark interest rate unchanged at 0.1% and announced further steps to revive the recession-stricken economy.

The Bank of Japan extended several steps to boost firms' access to liquidity, such as its commercial paper scheme - a type of short-term debt.

The bank's governor Masaaki Shirakawa warned that the first half of 2009 would be "very tough".

Japan's economy contracted by 3.3% in the last quarter of last year.

The economy has been hit hard by sharp falls in exports, domestic demand and corporate profits.

"Economic conditions have deteriorated significantly and are likely to continue deteriorating for the time being," said the Bank of Japan.

The cabinet of Prime Minister Taro Aso has been under pressure, as critics have questioned Tokyo's handling of the crisis.

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