The Bank of Japan yesterday left its key rate unchanged at between zero and 0.1 percent, and held steady on monetary policy despite increasing concerns over a high yen and the global economy.
In its assessment, the bank said Japan’s growth was slowing amid uncertainty abroad and market turmoil caused by the eurozone crisis.
Japan’s economy “has continued picking up, but at a more moderate pace mainly due to effects of a slowdown in overseas economies,” it said.
“The sovereign debt problem in Europe could result in weaker growth not only in the European economy, but also in the global economy, particularly through its effects on global financial markets,” the bank said.
Japan will “face an adverse effect from the slowdown in overseas economies and the appreciation of the yen as well as from the flooding in Thailand,” it added.
The central bank, which expects the world’s third-largest economy to eventually return to “a moderate recovery path,” added that its policy board voted unanimously to keep its key rate unchanged between zero and 0.1 percent.
The central bank last month announced further easing measures to help safeguard a fragile economic recovery from the impact of a strong yen and a slowing global economy.
Last month, the bank said it would boost its asset buying program by ¥50 trillion (US$650 billion) to ¥55 trillion, with the extra money earmarked for the purchase of Japanese government bonds.
By pouring liquidity into the market, the bank hopes to improve flows to help encourage investment and boost business. It also hopes, by relaxing credit conditions, to put downward pressure on the yen.
“The bank ... is steadily implementing the program mainly through the purchase of financial assets,” it said in a statement.
Last month, the bank trimmed its Japan growth forecast for this year and next year, while indicating it would not exit deflation before the end of fiscal 2013.
“The bank has also made it clear that it is committed to continuing the virtually zero interest rate policy until it judges that price stability is in sight,” it said.
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