Bank stocks down over BOJ interest rate concerns

20 February 2007

Japanese banking stocks dipped in value last night as speculation mounted that the Bank of Japan (BOJ) will not raise interest rates tomorrow.

Market leader Mitsubishi UFJ was down just over 0.6 per cent and its nearest competitor Mizuho Financial Group declined by 0.9 per cent by the close.

The BOJ had been expected to raise the interest rate, which currently stands at 0.25 per cent, in response to political lobbying that the bank fosters a climate of growth in the economy.

However, despite favourable results in fourth quarter GDP figures, which saw a rise in banking stocks' values, analysts predict that the BOJ may yet decide against a raise.

Commenting on the speculation in an interview with Japanese reporters finance minister Koji Omi said:

"Although the Japanese economy continues recovering, I want the BOJ to support the recovery through its policies,"

The BOJ have maintained interest rates at zero per cent since mid-2001, but raised the rate to 0.25 per cent in July of last year.

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