At the conclusion of a two-day monetary policy meeting the Bank of Japan voted 6-3 to keep the overnight call rate unchanged at 0.25%. In a separate statement, the BoJ said the economy continues to "expand moderately" and is expected to continue doing so. It did note weaker-than-expected private consumption has caused economic developments to "deviate slightly downward" from its October outlook. The BoJ's decision is in-line with government officials' urging to put off a rate hike due to weakness in consumption. As expected, BoJ governor Toshihiko Fukui reiterated the BoJ's "gradual" approach. The yen is now trading at nearly a four-year low and it weakened further against the euro. One benefit of not hiking this time is the BoJ will be able to review fourth quarter data, which is expected to show improvements, particularly in consumer spending. Prior to today's decision, six straight BoJ votes were unanimous. The BoJ's next rate decision meeting is Feb. 21.
• Sources: Bank of Japan, Bloomberg [I, II]
• Related commentary: The Yen's Slide: How Much Longer?, Japan: A lot of Idle Cash 'Gradually' Flowing into Stocks, Japan's November Industrial Production Sets Record, Electronics Inventories Down, Mixed Economic Data May Force BoJ to Postpone Hike, Japan: 2006 Year in Review, 2007 Outlook
• Potentially impacted stocks and ETFs: Mitsubishi UFJ Fin. Grp. (MTU), Mizuho Fin. Grp. (MFG). ETFs: iShares MSCI Japan Index (EWJ), iShares S&P/TOPIX 150 (ITF), BLDRS Asia 50 ADR Index (ADRA)
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