InsideJapan News Network

The Bank of Japan is expected to leave interest rates unchanged as country experiences its first recession in six years.

Many analysts have claimed that the bank has little choice except to sit tight, reports the International Herald Tribune.

Mari Iwashita, chief market economist at Daiwa Securities SMBC, said: "For the moment, there's nothing they can do but to wait."

In the second quarter, the Japanese economy saw its largest contraction for seven years, as rising prices and slowing exports led to a 0.6 per cent shrink.

Commenting on the central bank's likely course action, Hideo Jumano, chief economist at Dai-ichi Life Reseach, told the International Herald Tribune: " If they cut rates, that may just push the economy more to stagflation."

In related news, the Organisation for Economic Co-operation and Development has revised its economic expansion forecast down to 1.2 per cent from 1.7 per cent.



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