Interest rates in Japan not looking likely to rise soon

The Bank of Japan looks unlikely to hike rates anytime soon. From Bloomberg:

The Bank of Japan slashed its inflation forecast close to zero and kept the benchmark interest rate unchanged, saying prices will take another year to accelerate.

Core consumer prices will rise 0.1 percent in the 12 months ending March 2008 and 0.5 percent the following year, the central bank said in Tokyo today in its semi-annual outlook. Policy makers had previously predicted a 0.5 percent inflation rate this year...

Core consumer prices, which exclude fresh food, declined 0.3 percent in March from a year earlier, the government statistics bureau said today, the second straight monthly drop.

Other government reports today showed factory output unexpectedly slumped 0.6 percent, retail sales declined for a sixth month, this time by 0.7 percent, and household spending rose a less-than-expected 0.1 percent. The unemployment rate held at a nine-year low of 4 percent.

Japan's manufacturing received a more mixed report from the purchasing managers index, reports Reuters.

The NTC Research/Nomura/JMMA Purchasing Managers Index, which gives an early snapshot of the health of manufacturing, declined to a seasonally adjusted 52.3 in April from 52.5 in March...

The PMI's new orders index, a barometer of future demand that combines goods orders from both home and abroad, stood at 50.8, the lowest level since January 2005...

However, the output index, which approximates industrial production, rose to 54.2 from 53.5 in March, marking the strongest growth since November.

But weakness in manufacturing has not been confined to Japan. Elsewhere in Asia, March manufacturing production was also down in South Korea and in Singapore.