The Bank of Japan (BOJ) on Thursday held its key interest rate unchanged at 0.1 percent.

Toward the end of a two-day policy meeting, the BOJ's eight-member policy board also decided to buy up to 1 trillion yen (US$10.7 billion) worth of corporate bonds from commercial banks and other financial institutions to facilitate corporate finance amid the worldwide credit crunch.

Meanwhile the central bank unveiled plans to extend part of its emergency policies by six months on estimates that the financial turmoil will last longer than expected.

With those moves, the BOJ intends to encourage commercial banks and other financial institutions to lend more to businesses, which have difficulty in raising capital to cover the approaching end of fiscal 2008 through March.

Japan's economy has been hard hit due to its export-oriented nature which has made Japan especially vulnerable to the recent steep appreciation of the yen.

Its GDP contracted by an annualized 12.7 percent in the October-December quarter of 2008, the fastest pace in about 35 years as the global financial crisis took a heavy toll on the world's second largest economy.

(Xinhua News Agency February 19, 2009)