Japan keeps interest rate on hold

Image caption,
Deflation in Japan is causing considerable concern

Japan's central bank has kept its benchmark interest rate unchanged as it tries to nurture the country's slow recovery from recession while also attempting to tackle deflation.

Rates have been held at 0.1% since the end of 2008.

Besides falling prices, the strong yen - which eats into the value of overseas earnings for Japanese exporters - is also hitting the economy.

But the Bank of Japan said there were signs of recovery.

Exports and production in the world's second-largest economy were increasing, it added.

However, there was a warning that a slowing in Chinese demand for imports - as seen in figures released in Beijing on Tuesday - could hurt Japan's exports and global growth.

Earlier this month, Japan's prime minister suggested that the country's economy might need additional stimulus spending.

Naoto Kan said that while the economy was still growing, there was concern about the level of unemployment and the health of the global economy.