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Tuesday, 21st December 2010
In Business In Japan,

Bank of Japan could keep rate at zero

The Bank of Japan could be planning to keep interest rates close to zero until summer 2012, claim financial experts.

With yields on euroyen futures increasing significantly over the last two months, Bloomberg experts are predicting that the central bank may keep the overnight lending rate under 0.1 per cent.

According to all 16 Bloomberg economists, it is likely that rated will remain unchanged as investors remain concerned about deflation.

"We just can't anticipate a BOJ rate increase any time in the foreseeable future," said Seiji Adachi, a senior economist at Deutsche Securities Inc in Tokyo.

"The Bank of Japan doesn't appear to have any serious commitment to take risks, buying assets aggressively enough to spur inflation."

Meanwhile, Japan's gross domestic product is expected to decrease by around 1.9 per cent as the government's latest economic stimulus becomes less effective.

In addition, Reuters reports Japan's crude steel output fell by 5.5 per cent in November.

Written by Susan Ballion

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