Tokyo - Japan's central bank on Thursday decided to keep the short-term interest rate unchanged at 0.1 per cent as the nation suffers through the worst recession in its postwar era.

The Bank of Japan's policy board voted unanimously to forego an rate hike at the end of a two-day meeting after it lowered the rate from 0.3 per cent in December.

The bank's board also decided to extend emergency measures to facilitate corporate financing amid a global credit crunch, including the outright purchase of commercial paper, or short-term debt issued by companies.

The board met after the government announced Monday that Japan's economy, the second largest in the world, contracted at an annual pace of 12.7 per cent in the October-to-December quarter, its worst drop since the oil crisis 35 years ago, amid a record decline in exports. (dpa)