Japan holds interest rate at 0.5%
Wednesday, 08 October 2008


Japan has kept its key interest rate at 0.5% for the 20th consecutive month - amid continued worries about the global financial crisis, reports BBC.
 
The spread of the woes from the US to Europe and beyond is a worry for Japan, which relies heavily on exports.
 
Japan's central bank voted unanimously to hold the rate citing a "sluggish" economy and high inflation.
 
Last month, Japan reported that it had experienced its first trade deficit since November 1982.
 
"Strains in global financial markets have intensified in the wake of failures and rescues of US and European financial institutions and there are downside risks to the world economy," the Bank of Japan said.
 
"In addition, weaker income generation reflecting earlier deterioration in the terms of trade could potentially weigh on domestic private demand," it added.
 
The bank's decision came after Australia's central bank cut its official interest rate by a bigger-than-expected 1 percentage point to 6%.
 
But analysts said that Japan was unlikely to lower its main rate anytime soon, given it was already so low.
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