The Bank of Japan kept monetary policy on hold and gave a brighter assessment of the economy on Tuesday, encouraged by a rebound in factory output and increasing signs that the recovery from the devastating March earthquake is broadening. But it warned of risks to the country's outlook such as the global economic slowdown and the chance nuclear plant shutdowns could prolong power shortages and hurt Japan's potential growth.
As widely expected, the BoJ kept its benchmark interest rate steady at a range of zero to 0.1 percent by a unanimous vote and held off on loosening policy further. The central bank revised up its assessment of the economy, citing a pickup in household and business sentiment as well as the faster-than-expected pace at which companies restored supply chains hit by the quake. "Japan's economy is picking up as supply constraints from the earthquake ease," it said in a statement issued after the rate review, a sign that no imminent easing was on the horizon.