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TOKYO : The Bank of Japan said Tuesday it has decided to keep its super-low interest rates unchanged, in line with market expectations amid turmoil on global financial markets.
The central bank said in a brief statement that its policy board decided unanimously to keep the benchmark cost of borrowing at 0.50 percent, the lowest among the world's major economies.
The Bank of Japan has not raised interest rates since February last year amid domestic political uncertainty and volatility on financial markets over the US housing downturn.
The US dollar rebounded against the yen after the decision, rising to 106.32 yen minutes after the announcement, compared with 105.87 yen earlier.
The US unit, however, eased against the euro, which bought US$1.4436, compared with US$1.4406 earlier in the day, on a day of market turbulence on fears that US housing woes will lead to a credit crunch.
"The credit market indicates that the global economy is likely to deteriorate, with further falls on global equity markets," said Atsushi Ito, a strategist at Morgan Stanley Japan Securities.
Bank of Japan governor Toshihiko Fukui has previously warned that the Japanese economy was due to slow down in the near term, but the economy would pick up soon thereafter to post a modest expansion.
He, however, warned of effects of a slowdown in the United States, one of Japan's key export market.
The board members are seen as having voiced their concerns over declining housing-related investments and high energy price pressuring Japan's corporate sector, said the online edition of the Nikkei business newspaper.
The fragile state of the financial and capital markets also affected the board members' vote, it said. - AFP/ch
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