Japan's central bank has left its key interest rate unchanged at 0.3%, three weeks after reducing borrowing costs for the first time in seven years to tackle the recession.
The bank said the outlook remained highly uncertain. 'Given the slowdown in overseas economies and the turmoil in global financial markets, it will likely take some time for the necessary conditions for Japan's economic recovery to be satisfied,' it added.
The bank said Japanese economic activity had been increasingly sluggish due to the effects of earlier increases in energy and raw materials prices and the decrease in exports. It said this was likely to persist over the next 'several quarters'.
The decision by the monetary policy board to hold rates steady was unanimous. Japan confirmed this week that its economy had entered a recession for the first time in seven years, dragged down by weak exports and lower business investment.
Last month the BoJ cut its key interest rate by 0.2 points, the first reduction since March 2001, when it introduced an unprecedented policy of almost free credit to try to pull the economy out of the deflationary doldrums.
Meanwhile, Tokyo's Nikkei index closed up 2.7% at 7,911 this morning despite a sharp drop on Wall Street last night.
