TOKYO, Sept. 7 (UPI) -- The Bank of Japan said Tuesday it would keep its overnight bank-to-bank lending rate near zero, at 0.1 percent, during a mixed economic recovery.

"Japan's economy shows further signs of a moderate recovery," the bank said in a statement.

The bank said production and exports had both increased, "albeit at a slower pace." Fixed investment has accelerated among businesses, the statement said.

However, the bank said, "The employment and income situation has remained severe, but the degree of severity has eased somewhat."

In addition, although price inflation remains "a possibility" due to the rising price of commodities, "Japan's economy faces the critical challenge of overcoming deflation," the bank said.

The Reserve Bank of Australia, meanwhile, held to its lending rate, which is 4.5 percent.

Bank Gov. Glenn Stevens said the first half of 2010 saw the economy grow "faster than trend," but cautioned growth in China "is moderating to a more sustainable rate as policies (in China) are now less accommodating."

"With growth in the near term likely to be close to trend, inflation close to target and with the global outlook remaining somewhat uncertain, the (Reserve Bank of Australia) Board judged this setting of monetary policy to be appropriate for the time being," he said in a statement.