TOKYO, Aug 11 (Reuters) - The Bank of Japan kept interest rates on hold on Tuesday and maintained its cautious view on the economy, as deepening deflation and weak corporate spending threaten its forecast for a modest economic pick-up later this year.
The decision to keep rates on hold at 0.1 percent was made by a unanimous vote, as widely expected.
BOJ Governor Masaaki Shirakawa will hold an embargoed news conference and his comments are expected to come out some time after 4:15 p.m. (0715 GMT).
The BOJ said in a statement that annual falls in consumer prices were accelerating in reaction to last year's spike in oil prices. But the bank repeated that the pace of fall would narrow in the latter half of this fiscal year ending in March 2010.
The BOJ stuck to its view that Japan's economy has stopped worsening and was set for a pick up due to a sharp rebound in industrial output.
The BOJ voted last month to extend by three months the September deadline for its unconventional measures aimed at easing corporate funding strains. Markets have thus expected no new announcement from the central bank on policy measures.
Japan's economy is expected to have grown 1.0 percent in April-June after four straight quarters of contraction, a Reuters poll showed. But economists expect any recovery to be fragile as uncertainty over the global economic outlook keeps companies and households from boosting spending. (Reporting by Leika Kihara, Tetsushi Kajimoto)