Of Interest

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Tuesday, October 5, 2010

Japan interest rates Zero.

Japan's central bank has cut its benchmark interest rate to almost zero as it tries to stimulate the county's faltering economy.
People in Tokyo  
Rates had been held at 0.1% since the end of 2008, but have now been trimmed further.
Falling prices and the strong yen - which eats into the value of overseas earnings for Japanese exporters - have hit the economy.
The bank said it would maintain near-zero rates until prices stabilised.
A "near-zero" policy means that the rate moves within a small range between 0% and 0.1% - though no fixed rate is set.
'Bold move' "Although Japan's economy still shows signs of moderate recovery, the pace of recovery is slowing down partly due to the slowdown in overseas economies and the effects of the yen's appreciation on business sentiment," the Bank of Japan said.
Markets had not been expecting the rate cut.
"It was an utterly surprising and bold move. The bank has sent a favourable message to the markets, which had been expecting it to take only small, gradual steps," said Sieji Shiraishi at HSBC Securities.
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