JAPAN-ECONOMY/BOJ-RATES (URGENT)

RPT-BOJ keeps rates on hold, upgrades view on economy (For more stories on the Japanese economy, click [ID:nECONJP])

TOKYO Nov 20 (Reuters) - The Bank of Japan kept interest rates on hold and upgraded its assessment of the economy on Friday despite government grumbling that its forecast of a moderate economic recovery is too rosy.

The central bank maintained its commitment to keep monetary conditions very easy in a statement announcing the rate decision, reassuring markets and the government that it was not seeking an exit from ultra-low rates any time soon.

The decision to keep rates on hold at 0.1 percent was made by a unanimous vote, as widely expected.

Governor Masaaki Shirakawa will hold an embargoed news conference with his comments expected to come out sometime around 4:15 p.m. (0715 GMT).

Japan's economy grew at the fastest pace in more than two years in the third quarter as stimulus lifted consumer spending and capital spending rose, supporting the BOJ's view that the economy was starting to pick up. [ID:nT213576]

Many analysts agree with the BOJ's forecast that Japan is unlikely to return to recession, although they warn that growth will likely slow as falling wages reduce the lure of subsidies on cars and electronics.

The government has criticised the BOJ's view, however, and said Japan's economy will need to be stimulated next year to prevent such a dip. [ID:nT213576]

The BOJ last month decided to withdraw some of its support for corporate finance due to improvements in credit markets.

But it has forecast three years of deflation and pledged to keep rates near zero for as long as needed with Japan barely out of recession. (Reporting by Leika Kihara)