The Bank of Japan cut its key interest rate to 0.1% from 0.3%. It will likely take some time for the necessary conditions for Japan's economic recovery to be satisfied, the BOJ decision reads.
The Bank of Japan cut its key interest rate to 0.1% from 0.3% Friday, marking its second rate reduction this year in the wake of worsening economic indicators and increasing pressure from the government to do more to help the economy.
The BOJ's December Tankan survey showed business confidence among large manufacturers plunged at its fastest rate since the mid-1970s oil shock. The sentiment survey also showed firms were getting more pessimistic about the future, with outlooks indicating confidence likely to deteriorate in coming quarters.
Given the slowdown in overseas economies and the turmoil in global financial markets, it will likely take some time for the necessary conditions for Japan's economic recovery to be satisfied, the BOJ decision reads.
With regard to risk factors, much depends on financial conditions in the United States and Europe as well as developments in overseas economies, and attention will need to be paid to the further downside risks posed to economic activity.
In addition, if financial conditions, as reflected in lending attitudes of financial institutions and issuing conditions in the corporate bond and CP markets, should increase in severity, pressures acting to depress economic activity from the financial side may become more marked.
BOJ monetary decision
© Bank of Japan
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