The Bank of Japan (BOJ) on Wednesday left its key short-term interest rate unchanged at virtually zero and maintained the size of its asset purchasing program as a means to facilitate economic growth in Japan.
The central bank said that governor Masaaki Shirakawa and his nine-member policy board voted unanimously to keep the overnight call rate target between 0 and 0.1 percent, in a widely expected move.
The bank maintained that no monetary policy changes would take place pending prices showing more “medium-to long-term” stability, according to the central bank’s statement.
The board also all agreed that the bank’s asset-buying fund should remain unchanged at 20 trillion yen (260 billion U.S. dollars) and its funding program for commercial banks held constant.
“The pick-up in Japan’s economic activity has paused, mainly due to the effects of a slowdown in overseas economies and of the appreciation of the yen,” the BOJ said in a statement.
The statement followed the results of a two-day policy board meeting and the assessment of Japan’s economy was downgraded from the previous month’s which stated that Japan’s economy had ” continued picking up, but at a more moderate pace.”
The latest assessment by the BOJ marks the second straight monthly downgrade by the bank on Japan’s economy.
The central bank also added that the flooding in Thailand had added downward pressure to some industries, including Japan’s key automobile and electronic manufacturing sectors and that Japan was not immune from Europe’s sovereign debt woes.
Japanese exports fell 4.5 percent in November from a year earlier, marking the second straight month of decline, government data showed prior to the release of the BOJ’s latest report Wednesday
Japan’s trade deficit widened to 684.7 billion yen (8.79 billion U.S. dollars) from 273.8 billion yen in October, above consensus forecasts for a deficit of 440 billion yen, the government said.