Bank of Japan cuts interest rates to near zero

Two of the world's largest economies -- Japan and the US -- are embracing the near zero interest rate regime, in their efforts to fight the global economic slump, with the Asian major slashing key interest rate to 0.1 per cent.

The Japanese central bank's move comes just days after the US Federal Reserve reduced its benchmark lending rate to the range of 0 and 0.25 per cent.

The Bank of Japan (BoJ)on Rriday slashed the uncollateralized overnight call rate by 20 basis points to 0.1 per cent from 0.3 per cent, its second rate cut in two months.

BoJ also announced several steps with the aim of ensuring stability in financial markets as well as facilitating corporate financing by conducting appropriate money market operations.

The bank has decided to take measures to further facilitate corporate financing including outright purchases of commercial papers in addition to actions regarding outright purchases of Japanese government bonds (JGBs), the statement said.

The amount of outright purchases of JGBs would be increased to 16.8 trillion yen per year from 14.4 trillion yen per year with immediate effect. Also, the range of JGBs accepted in outright purchases would be expanded and purchases from specific maturity segments would be introduced.

Japan, world's second largest economy, has technically fallen into recession after showing two consecutive quarters of negative growth, while officially, the US has also slipped into recession.