The Bank of Japan (BOJ) announced on Friday that it will hold the uncollateralized overnight interest rate unchanged at 0.1 percent, saying it will "provide steady support for (the nation's) economy to return to a sustainable growth path with price stability."

The uncollateralized overnight rate is the amount charged for lending between banks overnight, and has a large impact on the economy.

The BOJ was upbeat on the future, saying "Japan's economy is picking up mainly due to various policy measures taken at home and abroad, although the momentum of self-sustaining recovery in domestic private demand remains weak." In the previous month, the bank has said the economy was "starting to pick up."

It said it expects "the pace of improvement of the economy is likely to remain moderate until around the middle of fiscal 2010."

The mood from the government, however, was much less optimistic. Both Deputy Prime Minister Naoto Kan and Finance Minister HirohisaFujii admitted that the economy was in deflation, leading to concerns that the recovery may slide into reverse.

(Xinhua News Agency November 20, 2009)