To: TobagoJack who wrote (7387 ) 7/4/2006 12:31:45 AM From: Taikun Read Replies (1) | Respond to of 217615 Tanigaki pounding the table fiercly: BOJ Should Keep Interest Rates Near Zero, Japan's Tanigaki Says July 4 (Bloomberg) -- The Bank of Japan should keep interest rates near zero because deflation in the world's second-largest economy isn't over yet, Finance Minister Sadakazu Tanigaki said. ``At this point we want the Bank of Japan to maintain its zero-interest-rate policy to support the economy and ensure deflation is beaten,'' Tanigaki said today at a regular news conference in Tokyo. ``We cannot yet say deflation is beaten, although without doubt it is steadily easing. Deflation's end is coming into sight'' as consumers and companies fuel growth. Japan's largest companies plan to increase spending 11.6 percent this fiscal year, the most since the year ended March 1991, the central bank's quarterly Tankan survey showed yesterday. The investment plans support the central bank's case for raising interest rates as soon as next week. Expectations for a rate increase yesterday drove the benchmark 10-year bond yield up to 1.965, the highest since yields touched 2 percent on May 16. A close watch on financial markets is necessary before the central bank considers whether to end zero rates at its two-day meeting that ends on July 14, Tanigaki said. Prime Minister Junichiro Koizumi yesterday said the central bank should carefully assess the economy and help overcome deflation before raising rates. Chief Cabinet Secretary Shinzo Abe urged the bank to keep rates near zero to support the economy. Kaoru Yosano, economic and fiscal policy minister, today told reporters conditions for a rate increase are falling into place, though they haven't been reached yet. To contact the reporter on this story: Mayumi Otsuma in Tokyo at motsuma@bloomberg.net Last Updated: July 3, 2006 22:33 EDT bloomberg.com