BoJ leaves rates unchanged, inflation tame in Europe

The Bank of Japan left interest rates unchanged today. Bloomberg reports:

The Bank of Japan held the benchmark interest rate near zero and refrained from saying whether it would end its corporate debt purchase programs.

Governor Masaaki Shirakawa and his colleagues voted to keep the key rate at 0.1 percent, the central bank said in a statement in Tokyo. The central bank became more optimistic about the economy, saying it has “started to pick up.”

Interest rates are also unlikely to be changed in the euro area soon as inflation remains tame, with consumer prices in France falling 0.2 percent in September.

In the UK, inflation is also low, falling to its lowest in five years in September, but other recent data were less supportive of continued low interest rates. From Reuters:

Inflation fell more than expected to 1.1 percent in September but analysts said this probably represented the trough and price pressures would start rising again over the next few months, due to rising commodity prices and the reversal of a cut in value added tax...

The Royal Institution of Chartered Surveyors said 22 percent more surveyors reported price rises in the last three months than price falls. That was the highest reading since May 2007, before money markets froze and sent the world's financial system to the brink of collapse...

The British Retail Consortium said retail sales rose at their fastest annual pace in 5 months in September. But it cautioned the rise was skewed by base effects, following a slump in sales in the wake of Lehman Brothers' collapse last year, and the timing of the August bank holiday.

The BRC said the value of like-for-like sales rose 2.8 percent in September compared with a year ago, the biggest rise since April, when sales were bolstered by the timing of Easter.