BOJ keeps rates on hold, says economy picking up

(For more stories on the Japanese economy, click [ID:nECONJP])

TOKYO, April 7 (BestGrowthStock) – The Bank of Japan kept interest
rates on hold on Wednesday and said the economy was continuing to
pick up, but analysts say prolonged deflation is likely to keep
government pressure simmering for further monetary easing.

“Japan’s economy has been picking up, mainly due to
improvements in overseas economies and various government policy
steps, although it lacks a self-sustained recovery in domestic
private demand,” the BOJ said in a statement announcing its
unanimous decision to keep interest rates on hold at 0.1 percent.

The previous month the BOJ said Japan’s economy was picking
up.

The central bank maintained its commitment to keep monetary
conditions very easy and said it was important to pull Japan out
of deflation.

The BOJ also said that when assessing price trends, it should
exclude the effect of a government move to scrap high school fees
from April. That move is seen shaving around 0.5 percentage point
off annual inflation figures, which could reinforce the view that
deflation will persist in Japan.

Governor Masaaki Shirakawa will hold an embargoed news
conference, with his comments expected to come out sometime after
4:15 p.m. (0715 GMT).

Markets had widely expected the BOJ to stand pat after it
eased its ultra-loose policy further last month by doubling the
size of a cheap fund supply tool put in place in December,
following a drumbeat of government pressure.

A weakening yen and stable bond yields had offered the BOJ
little justification to expand monetary easing.

Despite some bright signs in the economy, market players
expect the BOJ to ease policy some time later this year as the
government, hobbled by a ballooning fiscal debt, continues to
lean on the BOJ to support a fragile economy.

Money
(Reporting by Leika Kihara, Rie Ishiguro)

BOJ keeps rates on hold, says economy picking up