Bank of Japan leaves rates unchanged

The Bank of Japan held its benchmark interest rate steady at 0.5 percent at the end of a two-day policy meeting Tuesday amid recent price declines and concerns about the U.S. economy.

The policy board's decision _ widely expected _ was unanimous, the bank said in a statement.

In February, the central bank raised the benchmark interest rate half a percentage point to 0.5 percent. Economists don't expect another hike for awhile because recent data showed that core consumer price index in February fell 0.1 percent from a year earlier, the first decline in 10 months.

That CPI report undermined hopes that Japan has fully escaped deflation, or the downward spiraling of prices that drags on wages and overall growth _ despite other signs of recovery, including rising corporate profits and expanding gross domestic product.

The Bank of Japan's quarterly "tankan" survey, released a week ago, also painted a mixed picture. It showed that confidence among manufacturers slipped in March for the first time in a year, even as it found that large businesses plan to boost investment in the year ahead.

Bank of Japan Gov. Toshihiko Fukui reiterated that the bank doesn't have a preset idea on when it will next move on interest rates.

"Even though we are in the process of normalizing interest rates, I believe it's difficult to adjust them based on a pre-planned scenario," Fukui said.

Last week, the central bank's deputy governor, Toshiro Muto, raised concerns about the U.S. economy, Japan's biggest export market.

"The U.S. has both downside risks for the economy and upside risks for inflation," he told reporters last week.

In its monthly report, the BOJ kept its assessment of the economy as moderately expanding _ using the same wording for the third month in a row _ noting that consumer spending remains solid and prices will be stable in the long run.

Although the Bank of Japan is in principle independent from the government, some analysts say the bank is unlikely to raise interest rates until after the nationwide parliamentary elections scheduled for July.