Japan’s central bank held interest rates just above zero yesterday and held off on new policy steps, resisting growing government pressure to escalate the fight against deflation.
The seven-member policy board voted unanimously to keep the overnight call rate target at 0.1 percent. The Bank of Japan has maintained the super-low interest rate since December 2008 when it was cut from 0.3 percent.
It maintained its assessment of the economy, saying conditions are improving but that domestic consumption remains too weak.
Ahead of the central bank’s two-day meeting, government officials stepped up pressure on Bank of Japan Governor Masaaki Shirakawa to do more. Finance Minister Naoto Kan called for an inflation target of 1 percent, which he said was the minimum level required for stable prices.
The central bank, however, refrained from introducing new policy steps, instead reiterating its commitment to fighting deflation.
“The bank recognizes that it is a critical challenge for Japan’s economy to overcome deflation and return to a sustainable growth path with price stability,” it said in its statement. “To this end, the bank will continue to consistently make contributions as a central bank.”
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