Japan central bank leaves interest rate unchanged

TOKYO — Japan's central bank kept its key interest rate unchanged at virtually zero Tuesday as the country struggles to keep its economic recovery alive. In a widely expected decision, the Bank of Japan's nine-member policy board voted unanimously at a two-day meeting to keep the overnight call rate target at zero to 0.1 percent. The central bank maintained its assessment of the world's No. 3 economy. "Japan's economy still shows signs of a moderate recovery, but the recovery seems to be pausing," the central bank said in its statement. Japan's economy has been battered by slowing overseas demand, a strong yen and persistent deflation. Exports are losing momentum, and the employment rate remains high by Japanese standards. A key central bank survey last week showed that business sentiment fell for the first time in seven quarters. In a recent survey of 42 economists, the government-affiliated Economic Planning Association forecast Wednesday that gross domestic product would shrink 1.9 percent in the fourth quarter. The central bank said it has begun buying assets through a stimulus scheme announced in October. A temporary 5 trillion yen ($61 billion) fund will be used to purchase financial assets such as government securities and commercial paper in an attempt to lower longer-term interest rates and risk premiums. The central bank is offering another 30 trillion yen through a loan program. The Bank of Japan said it would "consistently make contributions as a central bank" through a three-pronged approach of "powerful" monetary easing, financial market stability and "providing support to strengthen the foundations of economic growth." — AP