Effect of Debt Crisis in Europe on Japan’s Economy

By Shinya Ajima

The Bank of Japan stepped up its warning Wednesday of risks facing the nation’s economy, saying its recovery “has paused” amid the negative impact from the rising yen and slower world economic growth in the wake of the sovereign debt crisis in Europe.

The warning came as the central bank ended a two-day policy meeting, in which the policymakers kept its key short-term interest rate steady at around zero to 0.1 percent while maintaining the asset-purchase program in order to boost economic growth in Japan. The nine-member Policy Board unanimously voted for the decision.

“The pickup 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 released after the meeting, downgrading its basic assessment of the economy for the second straight month.

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