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BOJ Cuts Rates, Pumps Funds to Ease Credit
- The Bank of Japan cut its key policy rate to 0.10 percent on Friday and moved to pump funds into the market to ease a corporate credit crunch as the yen's sharp rise and crumbling demand batter the economy.
A dramatic rate cut by the Federal Reserve on Tuesday, which took U.S. rates below Japan's, and the yen's subsequent rise to a 13-year high against the dollar had ratcheted up government pressure for BOJ action to help an economy already in recession.
Japan's government forecast earlier on Friday that the economy would not grow in the fiscal year from April 1, although a slew of stimulus packages would keep it from contracting.
That contrasted with bleaker private sector predictions that the deepening global malaise will hit the export-driven economy hard. The government acknowledged, though, that Japan's recovery might be delayed if global conditions worsened.
"Looking at employment and companies' financial conditions, in a broad sense the economy is in a very severe state," Finance Minister Shoichi Nakagawa told a news conference.
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