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Japan's Central Bank Holds Key Rate Steady

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The Bank of Japan (BOJ), or the central bank held its key interest rate steady at 0.1 percent on Tuesday for the fourth straight month.

The central bank's Policy Board decided by unanimous vote to keep the target rate for unsecured overnight call money on hold.

The BOJ also decided to start accepting a wider range of collateral from financial institutions when supplying funds to them, enhancing its efforts to ensure smooth fund supply.

It said Tuesday's decision to expand the range of eligible collateral was made with a view to ensuring stability in financial markets.

The bank said in a statement that exports have been "substantially decreasing" and domestic demand has become weaker against the background of declining corporate profits and the worsening employment and income situation in the household sector.

"Under these circumstances, economic conditions have deteriorated significantly," and "economic conditions are likely to continue deteriorating for the time being due to a further weakening in domestic private demand", according to the statement.

Regarding prospects, the bank projected that the economy will start recovering from the latter half of fiscal 20009, with price declines abating as global financial market regains stability and overseas economies move out of their deceleration phase.

The BOJ has taken a series of measures to boost economy since October last year, including reducing the interest rate, ensuring stability in financial markets and facilitating corporate financing. It also resumed its purchases of stocks held by banks, and is examining the specifics of providing subordinated loans to banks.

(Xinhua News Agency April 7, 2009)