BoJ keeps interest rates unchanged

As expected, the Bank of Japan left interest rates unchanged today. Bloomberg reports:

The Bank of Japan kept interest rates unchanged today because it needs more time to gauge the effect of the U.S. subprime-mortgage crisis on the global economy, Governor Toshihiko Fukui said.

Policy makers kept the benchmark overnight lending rate at 0.5 percent, the central bank said in a statement today in Tokyo. The decision was by an 8-1 vote, with Atsushi Mizuno the sole advocate for an increase for a fourth consecutive meeting.

Fukui said the central bank had "seen some improvement in global financial markets, yet some uncertainties remain"...

The central bank will stick to its stance of raising rates gradually even if it has to revise its forecasts for economic growth and inflation, Fukui said...

The central bank said the economy is "expanding moderately," leaving its monthly assessment unchanged today.

Gradual rate increases indeed. More than a year into its tightening cycle, Japan's interest rate has gone all the way up to 0.5 percent.

But I guess you can't blame the BoJ for being cautious. Economic data throughout the period had been mixed. And it continued to be mixed today. Again from Bloomberg:

Japan's machinery orders fell in August after climbing at the fastest pace in almost four years in July.

Orders declined a seasonally adjusted 7.7 percent to 1.04 trillion yen ($8.9 billion) from the previous month, the Cabinet Office said in Tokyo today...

Export growth quickened to 14 percent in August from a year earlier, helping the current account surplus widen by 42 percent, the Finance Ministry said. Bank lending accelerated for a second month in September, a central bank report showed...

Moody's Investors Service today raised Japan's debt rating to A1, the fifth-highest investment grade, citing confidence the government will pursue measures to reduce the world's largest public debt...

Elsewhere, South Korea also left interest rates unchanged at 5 percent today.