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Japan keeps monetary policy

December 19, 2006|From Times Wire Services

TOKYO — The Bank of Japan left its monetary policy unchanged at a board meeting today, keeping the overnight call rate target at 0.25% as widely expected by financial markets.

The decision came as Japan's government said today that the world's second-biggest economy was expected to grow 2% in the coming fiscal year but downgraded its estimate for growth in the current year.

The country's gross domestic product, the widest gauge of economic activity, is expected to expand by only 1.9% in the current year, down from a forecast of 2.1% made earlier this year, the Japanese Cabinet Office said in its annual outlook report.

But robust corporate earnings are expected to push up workers' income and fuel domestic consumption -- helping rev up growth to 2% next year, the report said.

Finance Minister Koji Omi called it a "relatively bright economic outlook," adding that "we believe the economy remains on sound footing."

Still both years would trail last fiscal year's 2.4% increase.

The downward revision for the current year came after data revealed that growth in the July-September period was far more feeble than first thought.

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