Japan's central bank keeps key rate at near zero

AP News
Posted: May 20, 2011 12:57 AM
Japan's central bank keeps key rate at near zero

Japan's central bank kept its key interest rate unchanged at virtually zero Friday to shore up a quake-battered economy.

The Bank of Japan's nine-member policy board voted unanimously at a meeting to keep the overnight call rate target at zero to 0.1 percent. The decision was widely expected.

The move came a day after Japan's government said the world's No. 3 economy shrank in the January-March quarter, veering back into recession as factory production and consumer spending wilted in the aftermath of March 11 earthquake and tsunami.

Japan's economy contracted at an annualized rate of 3.7 percent in the quarter. Exports also went south in March for the first time in 16 months. Companies are reporting lower earnings and diminished outlooks for the rest of the fiscal year.

The central bank warned Friday that Japan's economy would face "strong downward pressure" for the time being due to tumbling production and falling exports in the wake of the March twin disasters.