BoJ and govt agree to watch interest rates

Top government and central bank officials agreed in a meeting on Friday 21 May that they should carefully watch interest rates, Bank of Japan Deputy Governor Toshiro Muto said.

"The market could be stable but suddenly move. So we said we must be careful," he told reporters after a meeting of top central bankers with Prime Minister Junichiro Koizumi and other government officials.

A strong recovery in Japan's economy has bolstered views that Japan's deflation may end sooner than the two to thre