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BOJ Keeps Policy Unchanged, Call Rate at 0.50%

The Bank of Japan kept interest rates unchanged Tuesday as widely expected by markets, and analysts will scrutinize the central bank governor's remarks at a news conference later in the day for clues on the timing of the next rate rise.

The decision to keep the overnight call rate target at 0.50% was made unanimously by the nine-member policy board.

Financial markets did not react much to the result since few players expected any policy change by the BOJ after its rate rise last month.

The central bank will release its monthly economic report at 3 p.m. Tokyo time and Governor Toshihiko Fukui will hold a news conference from 3:30 p.m.

The BOJ raised its key policy rate to 0.50 from 0.25% last month by an 8-1 vote, judging that the economy would keep on track for steady growth with prices seen in an uptrend.

The economy has held up well since the rate hike but financial markets have remained volatile, with share prices briefly tumbling and the yen surging in the past few weeks as investors trimmed risk exposure due to uncertainty over the U.S. economic outlook.

Market traders are thus focusing on Fukui's news conference to gauge his view on recent financial market developments and if they could affect monetary policy if they persist.

Also under scrutiny is Fukui's view on tame price growth, with recently released data showing year-on-year growth in the core consumer price index grinding to a halt in January. Some analysts expect consumer price growth to turn slightly negative in February.

Japan is enjoying its longest period of expansion in the postwar era, albeit at a slower pace than previous booms, on the back of solid exports and capital spending by companies.

The BOJ has vowed to raise interest rates gradually if the economy and prices move in line with its scenario.