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Bank of Japan leaves interest rates unchanged
POSTED: 2:22 p.m. EDT, January 18,2007

The Bank of Japan confirmed it would leave its benchmark interest rate unchanged at 0.25 percent, deciding against a rate rise in the face of intense pressure from the government.

But the policy board was split, with three of the nine members voting against the decision, the central bank said in a statement.

The Bank of Japan, which has independence in setting monetary policy, raised interest rates to 0.25 percent in July, ending its five-year policy of keeping borrowing costs effectively at zero in a bid to boost the economy.

BoJ governor Toshihiko Fukui has since warned of the dangers of continuing too long with what he sees as such extraordinary measures, arguing for a need to return to a more normal monetary policy stance.

But the central bank is under intense pressure from the government not to act too hastily for fear of derailing the economic recovery.

Economic and Fiscal Policy Minister Hiroko Ota had earlier urged the BoJ to leave interest rates unchanged for now.

The secretary general of the ruling Liberal Democratic Party, Hidenao Nakagawa, went further, calling on the government to officially ask the central bank to delay any rate rise.

Under the Bank of Japan law, the government may ask the policy board to postpone a decision on monetary policy until the following meeting, a request which board members then vote on.

From:AFP
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