[achiever]

Bank of Japan maintained its target o/n call rate at 0.10%, as widely anticipated, at its policy meeting Tuesday. The BoJ has held the rate at that level since December, and is likely to keep it there indefinitely. The central bank maintained its view that the Japanese economy has stopped worsening and will pick up in the latter half of the fiscal year to March 2010, but expressed concern about "downside risks to economic activity and prices." The BOJ noted that annual consumer price falls were accelerating, going further than last month, when it said only that prices were declining. However, it said the falls were in reaction to last year's spike in oil prices and it made no mention of how weak demand was weighing on prices, suggesting that it was not overly concerned about prospects for a deflationary spiral. Meanwhile, July consumer confidence index rose to 39.4 NSA from 37.6 in June, a 20-month high. Consumer confidence extended its rebound from record-low 26.2 in December, a further indication of a bottoming out in the most severe Japanese recession since WWII. The outlook for the US bond market remains most importportant for USDJPY.