The Bank of Japan refrained from raising interest rates after confidence at small companies deteriorated and as policy makers assess the effect of the U.S. housing slump on economic growth.
Governor Toshihiko Fukui and his colleagues left the benchmark overnight lending rate unchanged 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.
Deputy Governor Kazumasa Iwata and board member Miyako Suda in the past month have cited waning small-business investment and profit growth, as well as the U.S. slowdown, as risks to Japan's economy. Confidence fell in the third quarter at companies with capital of 100 million yen ($850,000) or less, and whose revenue accounts for half of Japan's corporate sales.
``The Bank of Japan will probably need to put off a hike at least until December to nail down its assessment of global growth as well as the performance of small companies,'' said Masaaki Kanno, a former central bank official and now chief economist at JPMorgan Securities Japan Co.