Business

Mon May 26 19:24:07 PDT 2008

JERUSALEM, May 26 (Reuters) – The Bank of Japan will probably leave interest rates unchanged for the time being as it assesses the risks to the economy from both internal and external factors, a former BOJ official said on Monday.

"The interest rate in Japan is very low at the moment. The low rate already is giving stimulus to the economy," Yutaka Yamaguchi, a former BOJ deputy governor, told Reuters.

"So, I personally think that for the time being, the Bank of Japan will take a position of wait and see…how things develop inside and outside of Japan," he said on the sidelines of a meeting of members of the Group of 30.

The Bank of Japan has held its key rate steady at 0.50 percent since February last year.

Yamaguchi, who was recently considered for the post of BOJ chief despite having retired in 2003, said that while Western countries were slowing, emerging countries like China and India were showing robust growth and would likely impact Japan’s economy.

But Yamaguchi added that "risks were probably tilted to the downside" for Japan’s economy.

On Friday, BOJ Governor Masaaki Shirakawa said the central bank was monitoring both upside and downside risks to the economy and that he could not predict the course of its policy giving the current economic uncertainties.

(Reporting by Steven Scheer)

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