Tokyo, Oct 7, 2010 (DPA) The Bank of Japan decided Tuesday to lower its key interest rate to between zero and 0.1 percent to address the yen’s rise and the country’s slowing economy, the bank announced after a two-day policy meeting.
The central bank, which described the decision as ‘comprehensive monetary easing’, also said it would establish a five-trillion-yen ($60-billion) fund to purchase various financial assets including government bonds, it said in a statement.
The central bank’s decision triggered the benchmark Nikkei 225 Stock Average to surge more than one percent.
Japanese business leaders voiced their concern that the yen’s rise would erode their earnings and they urged the government to do more to counter the currency’s appreciation.
The yen hit a 15-year high against the dollar Sep 15, prompting Tokyo to sell the Japanese currency for the first time in six years.
The central bank’s quarterly Tankan survey on business mood showed last week that big manufactures expect business sentiment to worsen in the next three months until December, given slower global economic growth and the yen’s appreciation.
To shore up a slowing economy, the government of Prime Minister Naoto Kan is considering spending as much as 4.8 trillion yen on a fresh stimulus package.