TOKYO: The Bank of Japan cut interest rates on Tuesday, Oct 5 and pledged to keep rates at zero until prices are seen stable in a surprise move showing its concern that a strong yen and slowing growth are undermining a fragile economic recovery.
The central bank also decided to set up, as a temporary measure, a 35 trillion yen ($419 billion) pool of funds to buy or accept as collateral assets such as government bonds, commercial paper and asset-backed securities.
The decision to cut interest interest rates was made by a unanimous vote,
But board member Miyako Suda opposed including government bonds among the type of assets the BOJ could buy using its pool of funds.
Governor Masaaki Shirakawa will hold an embargoed news conference, with his comments expected to come out sometime after 4:15 p.m. (0715 GMT).
The BOJ had kept interest rates at 0.1 percent since late 2008. In the wake of sharp gains in the yen it eased monetary policy last December by setting up a facility offering cheap funds to banks, which was expanded in March and in August. ($1=83.45 Yen) - Reuters
The central bank also decided to set up, as a temporary measure, a 35 trillion yen ($419 billion) pool of funds to buy or accept as collateral assets such as government bonds, commercial paper and asset-backed securities.
The decision to cut interest interest rates was made by a unanimous vote,
But board member Miyako Suda opposed including government bonds among the type of assets the BOJ could buy using its pool of funds.
Governor Masaaki Shirakawa will hold an embargoed news conference, with his comments expected to come out sometime after 4:15 p.m. (0715 GMT).
The BOJ had kept interest rates at 0.1 percent since late 2008. In the wake of sharp gains in the yen it eased monetary policy last December by setting up a facility offering cheap funds to banks, which was expanded in March and in August. ($1=83.45 Yen) - Reuters
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