The Bank of Japan's Even Keel

The BOJ opts not to raise ultra-low interest rates amid the U.S. subprime mortgage crisis, even though they may encourage risky investments

Japan's central bank wasn't left with much of a choice. On Aug. 23, the Bank of Japan surprised nobody with its decision to leave its benchmark interest rate target unchanged. Only a month ago, BOJ Governor Toshihiko Fukui was dropping hints that a rate rise would soon be in the offing. In the end, the BOJ reached the conclusion that investors had hoped it would: It isn't worth rattling global markets any more than the turmoil in the U.S. subprime mortgage sector already has.

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