Japan's central bank today lowered its key rate to a range of zero to 0.1% in a surprise move to help safeguard a fragile recovery, its first interest rate change since December 2008.
It also announced further monetary easing measures in a bid to combat the harmful strength of the yen and beat persistent deflation.
In a unanimous vote, the central bank said it would 'maintain the virtually zero interest rate policy until it judges that price stability is in sight'. It added that it would examine establishing a temporary fund to buy around 5 trillion yen ($60 billion) in financial assets such as government bonds, commercial paper, corporate bonds and exchange traded funds.
The bank has been under increasing political pressure to do more to combat the effects of a strong yen on Japan's export-dependent economy.
It earlier expanded a loan scheme enabling domestic financial institutions to borrow a total of 30 trillion yen from the central bank for a maximum of six months against pooled collateral.
'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,' it said.
