The Bank of Japan left its super-low interest rates unchanged Friday amid fears of slowing growth or even recession in Asia's largest economy due to the widening fallout from the US subprime loan crisis.
Central bank governor Toshihiko Fukui said the Japanese economy looks set to maintain positive growth but the pace of the recovery will slow due to the economic woes in the United States and high commodity prices. "The domestic economy is slowing right now due to the situation in the world economy and international financial markets as well as high prices of raw materials," Fukui told a news conference.
It was increasingly clear that the US economy is losing steam, he said. "In the United States, which is the epicentre of the subprime (problems), a slowing trend in the economy is becoming more obvious, and a slowdown in individual consumption has become much clearer.
Japan's economy grew at a 3.7 percent annualised pace in the fourth quarter of 2007, twice as fast as expected, the government said Thursday. But analysts warn that a slowdown is inevitable due to the chilly global economic climate. The BoJ left its assessment of the Japanese economy unchanged in a monthly report released Friday.