Japan cuts rates to virtually zero
Japan's central bank has cut interest rates to virtually zero in an effort to inject life into a faltering economy.
In a unanimous vote, the Bank of Japan's nine-member policy board vote decided to set its overnight call rate target to a range of zero to 0.1 per cent.
The central bank had not changed the rate since December 2008, when it set the rate at 0.1 per cent.
The decision underscores growing worries about the Japanese economy, which is being battered by a strong yen and persistent deflation.
Recent economic indicators point toward deteriorating exports, production and corporate sentiment.
"Although Japan's economy still shows signs of a 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 central bank said in its statement.
The central bank said it would maintain zero interest rates until it deems that price stability is in sight.
Board members also plan to examine establishing a temporary asset-buying fund to purchase various financial instruments such as government securities, commercial paper and corporate bonds.
"Taking into account that there is little room for a further decline in short-term interest rates, the Bank will encourage the decline in longer-term interest rates and various risk premiums to further enhance monetary easing," it said.
The central bank's decision gave an immediate boost to the stock market, with the Nikkei 225 index jumping 1.1 per cent after spending much of the day in negative territory.