7.55 PM Monday, 20 May 2024
  • City Fajr Shuruq Duhr Asr Magrib Isha
  • Dubai 04:05 05:29 12:18 15:42 19:02 20:26
20 May 2024

Bank of Japan keeps interest rates unchanged amid global slowdown

By Agencies


Japan’s central bank kept interest rates unchanged Friday amid growing worries about a global slowdown.


With the Japanese economy battling weak housing investment, cautious corporate sentiment and anxiety about a slump in the vital US export market, investors had widely expected the Bank of Japan to keep its key interest rate at 0.5 per cent.


The market is awaiting for signs about the future direction for monetary policy from comments by outgoing Bank of Japan Gov Toshihiko Fukui expected later in the day.


Much of last year, the question had been on when the BOJ would raise rates amid signs of steady growth in Japan. But the global economic turmoil set off by the US subprime mortgage crisis has scotched that view. Now, some are starting to speculate the central bank may cut interest rates instead.


On Thursday, the government said the economy grew at a startlingly robust annual rate of 3.7 per cent for the fourth quarter of last year. But economists warn that rate will slow in coming months.


Some investors predict that the Bank of Japan will be under pressure to ease credit in coordination with the US Federal Reserve Board and other central banks around the world as part of a unified effort to keep global growth going.


On Thursday, Federal Reserve Chairman Ben Bernanke told Congress the US economy is deteriorating and signaled a readiness to keep lowering a key interest rate to shore things up. The Fed slashed its key rate 1.25 percentage points late last month to 3 per cent.


Given the dangers facing the economy, Bernanke said, the Fed “will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks.”


The European Central Bank has been a little more reluctant to cut rates, because of inflation worries.


Japanese Finance Minister Fukushiro Nukaga said the US housing troubles and high oil and commodity prices pose threats to the economy.


“There are various downside risks,” he told reporters. “We must closely monitor the overall situation.”  (AP)