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Version 0 Version 1
No alteration in Japanese rates No alteration in Japanese rates
(about 3 hours later)
The Bank of Japan has kept interest rates on hold at 0.25%, confounding many analysts who believed a rise was likely given the strengthening economy.The Bank of Japan has kept interest rates on hold at 0.25%, confounding many analysts who believed a rise was likely given the strengthening economy.
Policymakers voted 6-3 to keep rates where they were, a notable change in sentiment from their last meeting when they voted unanimously for no change.Policymakers voted 6-3 to keep rates where they were, a notable change in sentiment from their last meeting when they voted unanimously for no change.
Japan's economy has been performing strongly although domestic consumption is still seen as being fragile.Japan's economy has been performing strongly although domestic consumption is still seen as being fragile.
The level of borrowing is the lowest of all the major industrialised economies.The level of borrowing is the lowest of all the major industrialised economies.
Political pressure?Political pressure?
Some analysts speculated that the Bank may have come under political pressure not to lift rates at a time when ministers are worried about choking the economic recovery.Some analysts speculated that the Bank may have come under political pressure not to lift rates at a time when ministers are worried about choking the economic recovery.
I think they made the decision because they lacked certainty about the economic recovery Yasunori Sone, Keio UniversityI think they made the decision because they lacked certainty about the economic recovery Yasunori Sone, Keio University
The markets responded largely positively to Thursday's rate decision, the benchmark Nikkei index of leading shares closing up 109.58 points, or 0.6%, at 17,370.93.
But the yen fell to a 13-month low against other currencies after the decision was announced amid uncertainty over the Bank's long-term monetary policy.
Some analysts believe the Bank had given contradictory signals about its strategy in the lead-up to the meeting.
"I think what is worst for the Bank of Japan is that it could look as if they bowed to political pressure," said Yasunori Sone, a professor of political science at Keio University."I think what is worst for the Bank of Japan is that it could look as if they bowed to political pressure," said Yasunori Sone, a professor of political science at Keio University.
"I think they made the decision because they lacked certainty about the economic recovery.""I think they made the decision because they lacked certainty about the economic recovery."
Good for exporters
Policymakers raised the level of borrowing by a quarter point to 0.25% last July, ending Japan's long period of zero rates.Policymakers raised the level of borrowing by a quarter point to 0.25% last July, ending Japan's long period of zero rates.
The markets responded positively to Thursday's rate decision, the benchmark Nikkei index of leading shares closing up 109.58 points, or 0.6%, at 17,370.93.
The rate freeze was seen as good news for exporters since it would likely depress the value of the yen.The rate freeze was seen as good news for exporters since it would likely depress the value of the yen.
Economic prospects have improved in the past year with unemployment falling and business confidence rising.Economic prospects have improved in the past year with unemployment falling and business confidence rising.
But many are worried about the longevity of the recovery, pointing to the fact that third quarter economic growth of 0.8% was some way below expectations.But many are worried about the longevity of the recovery, pointing to the fact that third quarter economic growth of 0.8% was some way below expectations.