Japan Central Bank to Hold 2-Day Meeting on Rates

TOKYO -- Recent turmoil on global financial markets and worries about a slowdown in the U.S. economy are on Japanese central bankers' minds as they begin a two-day meeting Wednesday to decide on interest rates.

Before the U.S. subprime mortgage crisis sent global stock markets nose-diving in recent weeks, expectations had been high that the Bank of Japan would raise a key interest rate, now at a relatively low 0.50 percent.

But fears about the U.S. credit crunch are now weighing on Japanese shares as investors and hedge funds pull out in droves. A faltering U.S. economy, which could follow the financial markets volatility, is also a danger for Japan, whose major companies heavily depend on exports to the U.S.

The Bank of Japan last raised interest rates in February. Economists say the bank is waiting to look at more data on the strength of the nation's recovery.

In recent years, the world's second largest economy has been expanding on strong company profits and a gradual rebound in consumer spending. Japan's stock market had also been recovering until the U.S. subprime mortgage fiasco.

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