Bank of Japan: slashes interest rate but is it enough?

October 31, The Bank of Japan cut the key interest rate to 0.3 percent from 0.5 percent. This is the first cut in seven years. The move from Japan is the first that supports rate-cutting measures in response to the global financial crisis by other central banks. Some citizens say that the cut of 0.2 percent was desultory and the meeting of the nine member bank’s policy board showed how deeply divided they were.

Japan’s central bank have come under fire lately for its reluctance to reduce the key interest rate, which is already the lowest in the industrialized world, in an attempt bolster the stock market and to control the surging yen.

The interest rate cut that many economists though would have been halved to 0.25 percent came just a day after the government announced a $51 billion (£31 billion) stimulus package. Anal lists have said that the cut that was lower than expected would give off the wrong signals about Japan’s commitment to boost the global economy. In the stock market in Tokyo the Nikkei 225 index tumbled 5 percent to 8576.

Source: Guardian