Tokyo - The Bank of Japan decided to hold its key short-term interest rate unchanged at 0.3 per cent Friday. The policy board of Japan's central bank voted unanimously to keep the interest rate steady as the nation's economy "has been increasingly sluggish," the bank said in a statement at the end of a two-day meeting.
The bank lowered its short-term interest rate to the current 0.3 per cent from 0.5 per cent last month to help the world's second-largest economy weather the global financial crisis.
Bank of Japan Governor Masaaki Shirakawa said Friday that Japan's economy could "continue to face a tough environment" and indicated that it would take some time for it to recover.
"The situation will likely persist over the next several quarters," the bank said in the statement.
Japan's exports are expected to drop amid global economic slowdown, Shirakawa said.
But the governor indicated that the bank would not consider further cuts in its short-term interest rate because it is already at a low level and reducing it further could cause negative effects.
Japan's gross domestic product fell an annualized 0.4 per cent in the July-September period marking the second consecutive quarterly drop.
With the data, the government announced the nation has entered a recession.
