Japan's Central Bank Holds Benchmark Interest Rate at 0.5 Percent.
Japan's central bank kept its benchmark interest rate unchanged at 0.5 percent Tuesday after a two-day meeting policy meeting amid deepening concerns about slower growth in the U.S. economy, a key export market.
The Bank of Japan's latest monthly meeting came after Asian markets tumbled Monday on renewed worries about the U.S. subprime mortgage crisis and its effect on the American economy.
Japan's benchmark Nikkei index fell again Tuesday after briefly touching its lowest point since July 2006 on Monday. On Tuesday afternoon, the index was down 0.84 percent to 15,069.75 points.
Japan also faces lingering signs of deflation. The core consumer price index fell 0.1 percent in September for the eighth monthly decline; housing starts fell 44 percent in September from a year ago for the third straight month of decline. The jobless rate also worsened to 4.0 percent in September from 3.8 percent in August.
The central bank last hiked its key rate in February to 0.5 percent, still the lowest among major industrialized countries.
Japan Third-Quarter GDP Rose 2.6 Percent
Japan's economy grew at an annualized rate of 2.6 percent in the July-September quarter on strong exports, the government said Tuesday, but the outlook for exports was clouded by sluggish economic signs in the United States.
Gross domestic product grew a price-adjusted 0.6 percent from the previous quarter, according to preliminary data released by the Cabinet Office. On an annualized basis, the July-September GDP increased by 2.6 percent. The figures beat the annualized 1.8 percent gain forecast by economists surveyed by Dow Jones Newswires. In the April-June quarter, Japan's GDP declined 1.2 percent on an annual basis, marking the first contraction in growth for three quarters.
Although the latest results suggest Japan's economy is still recovering, there are also worrying signs. Exports, which accounted for much of the third-quarter growth, are at a risk of decelerating because of a slowdown in the U.S. economy.
Another sign is that housing investment, though its contribution is small, is declining. Private residential investment plunged 7.8 percent -- the largest drop since a 11.1 percent tumble in the April-June 1997 quarter -- likely hurt by tighter building regulations that came into force in late June. That was the third straight quarter of declines, after a revised 4.1 percent fall in the April-June period.
Although housing investment accounts for only 3 percent of the GDP, its decline is a cause for worry because it could hurt factory output and business investment by cooling demand for construction materials and durable goods such as refrigerators and TVs. Such a slowdown in internal demand would mean that the Bank of Japan will likely have to wait until next year to lift short-term interest rates from the current 0.5 percent level.
In the July-September period, consumer spending, which accounts for more than half of Japan's GDP, rose 0.3 percent on quarter, better than a revised 0.2 percent rise in the April-June period. Solid sales in the travel industry attributed to the rise. Business investment rose 1.7 percent, rebounding from a revised 2.1 percent decline in the April-June period. Companies bought more general industrial machinery, according to the Cabinet Office.
The data, meanwhile, indicate that Japan has so far withstood the impact of the slumping U.S. housing sector, which since August has roiled global stock markets, sank some hedge funds and caused the leaders of major U.S. banks to be sacked.
Exports rose 2.9 percent, up for the 10th straight quarter and much faster than a revised 0.9 percent gain in the April-June quarter as Asian nations bought more Japanese goods, such as cars and motorcycles. Imports were up 0.5 percent, after gaining 0.8 percent in the second quarter, due in part to higher oil and natural resource prices.
Japan's central bank kept its benchmark interest rate unchanged at 0.5 percent Tuesday after a two-day meeting policy meeting amid deepening concerns about slower growth in the U.S. economy, a key export market.
The Bank of Japan's latest monthly meeting came after Asian markets tumbled Monday on renewed worries about the U.S. subprime mortgage crisis and its effect on the American economy.
Japan's benchmark Nikkei index fell again Tuesday after briefly touching its lowest point since July 2006 on Monday. On Tuesday afternoon, the index was down 0.84 percent to 15,069.75 points.
Japan also faces lingering signs of deflation. The core consumer price index fell 0.1 percent in September for the eighth monthly decline; housing starts fell 44 percent in September from a year ago for the third straight month of decline. The jobless rate also worsened to 4.0 percent in September from 3.8 percent in August.
The central bank last hiked its key rate in February to 0.5 percent, still the lowest among major industrialized countries.
Japan Third-Quarter GDP Rose 2.6 Percent
Japan's economy grew at an annualized rate of 2.6 percent in the July-September quarter on strong exports, the government said Tuesday, but the outlook for exports was clouded by sluggish economic signs in the United States.
Gross domestic product grew a price-adjusted 0.6 percent from the previous quarter, according to preliminary data released by the Cabinet Office. On an annualized basis, the July-September GDP increased by 2.6 percent. The figures beat the annualized 1.8 percent gain forecast by economists surveyed by Dow Jones Newswires. In the April-June quarter, Japan's GDP declined 1.2 percent on an annual basis, marking the first contraction in growth for three quarters.
Although the latest results suggest Japan's economy is still recovering, there are also worrying signs. Exports, which accounted for much of the third-quarter growth, are at a risk of decelerating because of a slowdown in the U.S. economy.
Another sign is that housing investment, though its contribution is small, is declining. Private residential investment plunged 7.8 percent -- the largest drop since a 11.1 percent tumble in the April-June 1997 quarter -- likely hurt by tighter building regulations that came into force in late June. That was the third straight quarter of declines, after a revised 4.1 percent fall in the April-June period.
Although housing investment accounts for only 3 percent of the GDP, its decline is a cause for worry because it could hurt factory output and business investment by cooling demand for construction materials and durable goods such as refrigerators and TVs. Such a slowdown in internal demand would mean that the Bank of Japan will likely have to wait until next year to lift short-term interest rates from the current 0.5 percent level.
In the July-September period, consumer spending, which accounts for more than half of Japan's GDP, rose 0.3 percent on quarter, better than a revised 0.2 percent rise in the April-June period. Solid sales in the travel industry attributed to the rise. Business investment rose 1.7 percent, rebounding from a revised 2.1 percent decline in the April-June period. Companies bought more general industrial machinery, according to the Cabinet Office.
The data, meanwhile, indicate that Japan has so far withstood the impact of the slumping U.S. housing sector, which since August has roiled global stock markets, sank some hedge funds and caused the leaders of major U.S. banks to be sacked.
Exports rose 2.9 percent, up for the 10th straight quarter and much faster than a revised 0.9 percent gain in the April-June quarter as Asian nations bought more Japanese goods, such as cars and motorcycles. Imports were up 0.5 percent, after gaining 0.8 percent in the second quarter, due in part to higher oil and natural resource prices.
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