Bank of Japan Cut Interest Rate by 20bp to 0.10%

The Bank of Japan rate cut by 20 bps to 0.10% was within market expectations. Following the Fed rate cut to 0-0.25% earlier in the week, the BoJ was under a lot of pressure to indicate that they also were prepared to pull out all of the stops in an effort to support the Japanese economy, already in recession and now sinking faster under the weight of a global downturn. With rates already virtually zero, they emphasized their willingness to provide liquidity to the market by expanding the scope of their purchases, increasing its outright buying of JGB's to 1.4 tln per month from 1.2 tln, adding floating-rate and 30-year bonds to its buying operations, and temporarily buying commercial paper.. The move might be more helpful in facilitating financial market stability, rather than any measurable boost to economic growth.

DailyFX

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