Tokyo - The Bank of Japan decided Friday to maintain its key short-term interest rate at 0.5 per cent amid growing fears of inflation.

The policy board of Japan's central bank voted unanimously at the end of a two-day meeting to forgo an interest-rate hike, keeping the overnight lending rate the lowest among the world's major economies.

The interest rate has remained unchanged since February 2007, when the bank raised it from 0.25 per cent.

Governor Masaaki Shirakawa acknowledged last month that a slowdown in the Japanese economy had become evident with high energy and raw material prices hurting consumer confidence and domestic demand. (dpa)