Japan's Central Bank Keeps Main Interest Rate Unchanged | Voice of America - English
The Bank of Japan has decided to keep interest rates unchanged because of economic uncertainties, while Thailand's central bank has cut rates in a bid to boost economic growth.
The Japanese central bank decided to keep its benchmark interest rate steady at a quarter of a percentage point - although it had earlier indicated it would raise rates this month. Analysts say the decision came amid pressure from the Japanese government, which wanted to delay a rate increase to have more time to study consumer spending and other economic data. Richard Jerram is an analyst at Macquarie Securities in Tokyo. He says while it was wise to hold off a rate increase because of Japan's low inflation and many economic uncertainties, the Bank of Japan should not have bowed to political pressure. "I think it is generally very unwise for central banks to bow to political pressure because of the damage it does to credibility, because of the long-term costs involved in that," Jerram says. "So I think they probably should have raised interest rates after having given such a clear signal they were going to." The Bank of Thailand brought down its key interest rate, in a move aimed at raising economic growth. The bank cut the rate by a quarter of a percentage point, bringing it down from an eight-year high of five percent. China's foreign exchange reserves reached a record one trillion dollars, an increase of more than 30 percent over a year earlier. In early 2006, China surpassed Japan as the country with the largest foreign exchange reserves in the world. A majority of the reserves are in dollar-denominated investments, such as U.S. Treasury bills. In other news from China, the country's leading Internet search engine, Baidu, will launch an online music service with Britain's E.M.I. Publishing. The free service will provide a stream of Chinese-language music that consumers can listen to, but not download. E.M.I. and Baidu will share the revenue generated from online advertisements. The two companies say they are also looking at the possibility of offering free music downloads in the future. Britain's largest clothing retailer, Marks and Spencer, will set up a joint venture in Taiwan with President Chain Store, Taiwan's biggest food company. Marks and Spencer will take a 60 percent stake in the new clothing retailer, while the remaining 40 percent will go to the Taiwanese company. The venture will open its first outlet in the southern city of Kaohsiung in May.