TOKYO, Nov. 21 (Xinhua) -- The Bank of Japan (BOJ), or the central bank of the country, announced Friday that its key interest rate will be kept unchanged at 0.3 percent.

    The BOJ Policy Board voted unanimously after a two-day board meeting to keep the central bank's target rate for unsecured overnight call money stable. Last month it lowered the benchmark lending rate in the interbank market from 0.5 percent to the current level for the first rate cut in more than 7 years.

    "Japan could continue to face a tough economic environment for the time being," BOJ Governor Masaaki Shirakawa told reporters. The necessary conditions for an economic recovery may not appear in the short term, he added.

    The BOJ said in a statement that the Japanese economy "has been increasingly sluggish due to the effects of earlier increases in energy and materials prices and the decrease in exports."

Bank of Japan Governor Masaaki Shirakawa attends a news conference at the Bank in Tokyo November 21, 2008

"The situation will likely persist over the next several quarters," the bank added.

    The Japanese central bank has joined other central banks in efforts to combat liquidity crunch, implementing a series of credit-easing measures.

    The BOJ chief also indicated at a press conference that the central bank is not likely to cut its key interest rate in the immediate future, saying it is at a low level and further cuts could have various negative impacts.

    Senior officials of BOJ, including Shirakawa, has publicly stated after last month's rate cut that credit conditions in Japan are accommodative enough, suggesting further rate cuts could even have a negative impact on financial markets and the economy.

    Government data showed Monday that the nation's real gross domestic product declined an annualized 0.4 percent in the July-September period for a second straight quarterly fall, adding to the evidence that the economy has entered a recession. Other official figures have underlined that the country's exports are declining sharply.