Friday, Oct 31, 2008
The Bank of Japan has cut interest rates for the first time in seven years – but it has not been able to stop markets continuing to slide.
With the policy board voted to a 4-4 deadlock, governor Masaaki Shirakawa cast the deciding vote to trim the central bank’s key interest rate to 0.3% from a decade-high 0.5%.
But Tokyo’s Nikkei 225 index sank 5% after the cut as investors who wanted a full quarter-point cut branded the step as “half-hearted”.
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The moves comes after government pressure to join the global response to the worldwide credit crunch, but the markets had widely expected a cut to 0.25%.
The rate cut was announced two days after the US Federal Reserve slashed rates by 0.5 percentage point to 1%, while China, Hong Kong and Taiwan also cut rates this week.
The central bank also cut its economic outlook, saying the the world economy faced severe conditions for some time.
This article was posted: Friday, October 31, 2008 at 5:23 am