BoJ holds rates as US economy weakens further

It looks like normalisation of interest rates in Japan has been put off indefinitely. From Bloomberg:

The Bank of Japan kept interest rates on hold amid concern that slowing global economic growth will cut demand for exports and costlier energy and materials will damp spending at home.

Governor Toshihiko Fukui and his colleagues left the overnight lending rate at 0.5 percent, the lowest among major economies, the central bank said today in Tokyo. Fukui, who has called for gradual rate increases since 2006, will probably finish his term on March 19 by leaving credit costs unchanged.

The decision looks justified based on the economic reports out yesterday from the US. Practically all were negative, although you'd have a hard time telling from the way US stock indices closed yesterday. From MarketWatch:

U.S. stocks on Friday closed with weekly gains...

Down nearly 100 points during the session, the Dow Jones Industrial Average fell 28.8 points, or 0.2%, to end at 12,348.2, giving the blue chips a weekly climb of 1.4%...

Lower until the final moments of trade, the S&P 500 reversed course to gain 1.13 points, or nearly 1%, to 1,349.99, giving it a weekly rise of 1.4%, while the Nasdaq Composite declined 10.74 points, or 0.5%, to 2,321.8, leaving the technology-laden index with a gain of 0.7% from a week ago...

Ahead of the opening bell, the Labor Department said the cost of goods imported into the country climbed 1.7% in January, powered largely by rising energy prices. See Economic Report...

The Federal Reserve of New York's Empire State Manufacturing Survey pointed to declining conditions this month, with the gauge falling nearly 21 points to stand at a negative 11.7, its first drop into the red since May 2005 and far worse than the fall that analysts predicted. Read more...

Having less of an impact on the equities market was word from the Federal Reserve that U.S. industrial production climbed 1% in January, matching the expectations of economists surveyed by MarketWatch.

A survey released by the University of Michigan and Reuters had consumer sentiment darkening further in February, with an index falling to 69.6 mid-month from 78.4 in January. See full story.

China did report a strong trade performance for January though. From Bloomberg:

China's trade surplus jumped more than economists estimated in January, a sign that the world's fourth-biggest economy may keep powering global growth as a recession looms in the U.S.

The gap widened 23 percent from a year earlier to $19.5 billion, the customs bureau said on its Web site today. That was more than the $17 billion median estimate of 19 economists surveyed by Bloomberg News...

Exports rose 26.7 percent from a year earlier to $109.7 billion. Imports increased 27.6 percent, the largest gain in almost two years, to $90.2 billion.

But January -- and February -- data from China are always difficult to interpret.

China's biggest annual holiday, Lunar New Year, may have helped to boost the increase in the trade surplus because it started earlier in February this year than it did last year.

"Exporters were pushing to get stuff out the door," said Stephen Green, senior economist at Standard Chartered Bank Plc in Shanghai. "February exports will be lower."