Bank of Japan Votes To Keep Interest Rates Near Zero

The Bank of Japan (BOJ) has voted to keep interest rates near zero, and holding off on further measures to try and get a handle on the strengthened yen. The decision by the nine-member Policy Board was unanimous to keep rates at .1%. The rate has not changed since December 2008. The BOJ held an emergency meeting last week as well, introducing a low-interest credit program that has been criticized as being too modest. The strong yen is bad for Japan’s export driven-economy, cutting into profits for exporting companies such as Sony SNE, Toyota TM, and Honda HMC as well as making their goods less competitive in foreign markets. A statement released by the BOJ said that the economy is showing signs of a moderate recovery, but that there were growing head winds, such as U.S. economy uncertainty, and instability in foreign exchange and stock markets. An additional uncertainty factor comes from the presidential election for the Democratic Party of Japan on September 14, where Prime Minister Naoto Kan faces challenger Ichiro Ozawa. Unlike Kan, Ozawa has called for intervention in foreign exchange markets.