JAPAN'S central bank kept a key interest rate unchanged at 0.5 percent yesterday amid growing concerns about financial market turmoil on Wall Street, slowing domestic growth and rising inflation.
The Bank of Japan stuck with its description of economic growth as "sluggish against the backdrop of high energy and materials prices and weaker growth in exports." However, it maintained its view the economy "will return onto a sustainable growth path with price stability."
Despite various downside risks facing Japan, the central bank is unlikely to cut rates until faced with serious economic deterioration, said Masaaki Kanno, chief economist at JP Morgan Securities in Tokyo.
"While the first-round effect from Lehman's failure on the economy and the financial markets is limited in Japan, the risk of the larger-than-expected second round effect through a global recession and global financial turmoil is growing," he said.