datasets.iitb.crawledDocs.yn_08Oct08_file_250 Maven / Gradle / Ivy

    Primary Navigation Secondary Navigation Search: Japan central bank maintains key interest rate By TOMOKO A. HOSAKA, Associated Press Writer Tue Oct 7, 1:16 AM ET TOKYO - Japan's central bank left its key interest rate unchanged Tuesday amid heightened anxiety that the U.S. credit crisis was quickly spreading from Wall Street to Europe and beyond. In a widely expected decision, the Bank of Japan voted unanimously to maintain the uncollateralized overnight call rate at 0.5 percent for the 20th straight month, citing a "sluggish" economy along with high inflation rates . "With regard to risk factors, strains in global financial markets have intensified in the wake of failures and rescues of U.S. and European financial institutions and there are downside risks to the world economy ," the central bank said in a statement. "In addition, weaker income generation reflecting earlier deterioration in the terms of trade could potentially weigh on domestic private demand." The BOJ's decision followed news from Sydney that Australia's central bank cut its official interest rate by a bigger-than-expected 1 percentage point to 6 percent, a move that lifted Australian and some other regional markets. Analysts had expected a half-point cut. Economists and market observers now await comments by Bank of Japan Gov. Masaaki Shirakawa , as speculation grows that it may soon coordinate with the U.S. Federal Reserve and the European Central Bank in an emergency policy move. But Merrill Lynch economists Takuji Okubo and Masayuki Kichikawa doubt that the Bank of Japan would lower its main interest rate  already so low  anytime soon. Instead, they say, it could join an international effort in other ways, such as by lowering its Lombard rate to boost bank lending. "However, cutting its already low overnight target rate may be a big hurdle (the Bank of Japan) is unwilling to take at this juncture," they said in a research memo Monday. "Further reduction in money market rate would reduce incentives for money market lenders, leading to lower liquidity in the market." Earlier Tuesday the Bank of Japan injected another 1 trillion yen ($9.9 billion) into the money market in its 15th straight day of emergency operations to foster smoother lending among banks. The Bank of Japan 's quarterly "tankan" survey released last week revealed a troubling snapshot of the world's second-largest economy: waning corporate sentiment, lower profit forecasts and a pullback in capital spending. Major Japan manufacturers were the gloomiest in five years, and with demand slumping overseas they were bracing for more turbulence in the months ahead. Japanese shares fell, but managed to recover from steep early losses during afternoon trading. The benchmark Nikkei 225 stock average was down 1.8 percent at 10,287.08 after earlier tumbling more than 5 percent to 9,916.21, dropping under the psychologically key 10,000 level for the first time in almost five years. RECOMMEND THIS STORY Recommend It: Average ( Not Rated ) AP AP AP AP AP AP Reuters AP AP Reuters Reuters - Tue Oct 7, 7:03 PM ET ABC News - Tue Oct 7, 9:31 PM ET FOXBusiness - Tue Oct 7, 7:03 PM ET Reuters - Tue Oct 7, 6:31 PM ET News Video News Search Related Searches: RELATED QUOTES 9447.11 -508.39 1754.88 0.00 996.23 0.00 Delayed Data - Yahoo! News Topic Pages In-depth coverage on topics including , , and . Elsewhere on the Web ABC News: FOXBusiness: Time.com: Yahoo! Autos Check out the 2008 & 2009 models on Yahoo! Autos. ADVERTISEMENT Free 2-week trial! Free delivery, no late fees, return in-store or mail! Start today. Add headlines to your personalized My Yahoo! page Business - Financial/Banking Industry NEWS ALERTS Get an alert when there are new stories about: U.S. Federal Reserve money market rate inflation rates European Central Bank uncollateralized overnight call rate - - Search: Primary Navigation Copyright © 2008 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten or redistributed without the prior written authority of The Associated Press.