Bank of Japan maintains zero interest rates

0 Comments | AFP, May, 2006

TOKYO (AFP) — The Bank of Japan has maintained its zero interest rate policy as expected although financial markets are bracing for a rise in borrowing costs soon as deflation eases.

"The Bank of Japan will encourage the uncollateralized overnight call rate to remain at effectively zero percent," the central bank said in a brief statement after the end of the two-day meeting.

The decision of the nine-member board was unanimous, the bank said.

The Bank of Japan in March scrapped its deflation-fighting policy of flooding the financial system with cash and economists expect it to end near-zero interest rates later this year.

The market was hoping for fresh leads on the outlook for monetary policy from BoJ governor Toshihiko Fukui at a press conference...