BOJ Leaves Interest Rate Unchanged

TOKYO - Japan's central bank left its key interest rate unchanged at 0.5 percent Thursday after wrapping up a two-day policy board meeting.

The decision matched expectations of analysts who predicted the Bank of Japan didn't want to risk rattling markets or the public by tightening credit before July 29 parliamentary elections. The BOJ's governing board voted 8-1 on the decision.

Some analysts think the central bank will raise rates in August, after the elections. The bank last raised its benchmark interest rate in February, lifting it from 0.25 percent.

Japan is emerging from a decade-long slowdown in recent years, although deflation - a state of falling prices - remains a risk. The country's core consumer price index for May fell 0.1 percent, the fourth straight monthly decline.

Bank of Japan Gov. Toshihiko Fukui has maintained that if the outlook for the economy is convincingly solid, raising interest rates is possible even if consumer prices are falling slightly.

Separately Thursday, the BOJ issued its monthly economic report, saying that "Japan's economy is expected to expand moderately."

The economy is moving in line with its forecasts for expansion and rising prices, it said, suggesting that the BOJ could be preparing for another rate hike.