BOJ likely to Keep Rate at 0.5%

The Bank of Japan is likely to freeze interest rates following a meeting chaired by Masaaki Shirakawa.

Deputy Governor Shirakawa, was appointed the central bank chief by Prime Minister Yasuo Fukuda yesterday has vowed along with six fellow members to uphold the overnight lending rate at 0.5 percent until the meeting is concluded.

It is unanimously agreed that more evidence is needed before the decision is made as to whether to cut interest rates for the first time in over seven years.

The recent economic climate has been mixed as both export growth and inflation are growing amongst a period where the corporate sector is highly pessimistic amid fears of recession.

The BOJ has made it clear that they wish to take the long term approach in managing the country’s economy fiscal conditions and foreign-exchange rates in order to make sure that they do not hamper growth by using a short term fix.

The Bank has announced that it will have no preconceptions about the policy and with examine all possible outcomes as it aims to keep the world’s second largest economy on track despite the current economic uncertainty and prevailing market conditions following the credit crunch.

It is predicted that the bank will reduce its projection for this years economic growth this month and estimates are indicating that a 1.5 percent slump is highly probable.

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