The Bank of Japan decided to keep the Japanese interest rates steady near zero to fight deflation risks that continued to weigh on economic activity in the world’s second largest economy. A deflated Yen is always a threat on the Japanese external economic relations which is based on exporting.

The surging yen is still threatening the nation’s exports, which is pressuring policy makers to find measures to battle the risks facing the economy. The BOJ had to keep the benchmark interest rate at 0.1%.

The bank might not have any options but to keep borrowing costs at the same level in fighting deflation, keeping in mind that policy makers announced the economy is in deflation in November.

The central bank’s assessment for the economy remain unchanged as it said in the statement accompanied the rate decision “the economy is picking up”, adding that there is no sufficient momentum to guarantee a sustaining recovery in domestic and private demand.

Naoto Kan the Japanese Finance Minister said today the BOJ has “various measures” to fight deflation and the surging yen, and he expected the path for ending deflation to be “foreseeable” within two or three years.

However, monetary policy makers ensured that they will persist with its expansionary policy adopted since the beginning of recession. The BOJ expected deflation to moderate than forecasted alongside rising crude oil prices, that could be added as a sign of optimism and give us a better outlook for the economic situation.