20 Dec 2008

Japan cuts rates again

2:03 pm on 20 December 2008

Japan has slashed interest rates to almost zero as it tries to stave off a long recession.

The Bank of Japan sliced lending rates to 0.1% from 0.3% on Friday as the government forecast the economy would not grow at all until 2010.

The bank also tried to shore up credit markets by announcing it would start directly buying commercial paper, the short-term debt companies issue to run their daily operations.

The cut was agreed in a 7-1 vote by the policy board of the bank.

It follows a similar move on Tuesday by the US Federal Reserve, which slashed its lending rate to 0.25% from 1%.

World crude prices held steady above $US36 per barrel on Friday, at their lowest levels in more than four years, despite a cut in production of 2.2 million barrels per day by OPEC.