Japan's central bank today held its rock-bottom interest rates steady to give the world's number two economy more time to recover from its worst recession in decades.
The Bank of Japan reiterated its view that Japan's economic conditions 'have stopped worsening,' but cautioned that much uncertainty remains because of the murky outlook for the global economy.
'Public investment is increasing and exports and production are picking up,' the Bank of Japan said in a statement. 'On the other hand, business fixed investment is declining sharply mainly reflecting weak corporate profits,' it added.
Private consumption is showing some signs of recovering, helped by economic stimulus measures, but generally remains weak because of rising unemployment and sluggish wages, it said.
The bank's eight-member monetary policy board voted unanimously at the end of a two-day meeting to leave the main lending rate unchanged at 0.1%, as expected.
The bank is fighting Japan's worst recession in decades with super-low interest rates and a policy of buying up corporate debt to keep credit flowing to cash-strapped firms.
It said the economy should start recovering from the second half of this financial year to March 2010, supported by policymakers' efforts to tackle the economic downturn.
Japan entered recession in the second quarter of 2008 as its heavy dependence on overseas demand to drive growth left it highly exposed to the global downturn.
Its economy shrank at an annualised pace of 14.2% in the first quarter of 2009, the worst performance on record, but analysts believe it returned to positive growth in April-June, helped by rebounding exports.
