Japan opts to keep rates on hold

Analysts expects Japan to leave interest rates unchanged for some time

The Central Bank of Japan has opted to keep interest rates unchanged at 0.5%.

The unanimous decision by the bank's members, made during a two-day meeting, had been widely expected.

Analysts say Japan, a key exporter, is likely to leave rates unchanged for some time, due to inflationary pressure and a US slowdown.

Japan has the lowest rate among the Group of Eight industrialised nations. Its last rate increase was in February 2007, from 0.25% to 0.5%.

"Investors hardly reacted to the decision. The outcome was expected and it had little impact on the currency market," said Hidekazu Tsujimoto, a dealer at Mizhuho Bank said.

One dollar was worth 107.72 yen on Friday morning from 107.89 on Thursday.

Earlier this week, Japan revised its economic growth rate for the first quarter of the year upwards, after higher-than-expected capital investment, but economists expect slower growth ahead.

Fears remain about what will happen to the world economy, as food and fuel prices continue to rise.

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