Bank of Japan keeps interest rates on hold

The Bank of Japan left interest rates unchanged this morning while financial markets keenly awaited the central bank's half-yearly…

The Bank of Japan left interest rates unchanged this morning while financial markets keenly awaited the central bank's half-yearly economic outlook report and Governor Toshihiko Fukui's briefing due later in the day.

As widely expected, the central bank kept its overnight call rate target at 0.25 per cent - a level maintained since July - in a unanimous decision by its nine-member board after a one-day policy meeting.

Investors, seeking clues on the timing of the BOJ's next rate move after its first rise in six years in July, are now looking to the bank's report on the economy and prices, due at 3pm (6am).

Another market focus is Fukui's appearance before a parliamentary committee in the afternoon and his news conference scheduled for 3:45pm (6.45am).

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A string of economic data released earlier today was a shade weaker than market expectations, bolstering expectations that the BOJ may not raise interest rates this year.

The jobless rate rose to 4.2 per cent in September from 4.1 per cent in August, above market anticipations of a flat reading of 4.1 per cent.

The jobs-to-applicants ratio for September was 1.08, meaning 108 jobs were available per 100 applicants, unchanged from August but below the market consensus forecast of 1.09.

Separate data showed manufacturing activity in Japan grew at the slowest pace in 14 months in October as demand at home and abroad eased.

The NTC Research/Nomura/JMMA Purchasing Managers Index, which gives an early snapshot of manufacturing activity, slipped to a seasonally adjusted 54.1 from 54.8 in September.

Other figures showed overall household spending fell 6 per cent in September from a year earlier in price-adjusted real terms, well below a median market forecast of a 2 per cent decline and the ninth straight month of year-on-year decline.

Compared with August on a seasonally adjusted basis, it fell 0.6 per cent.