The bank of Japan has reduced its main interest rate from 0.5% to 0.3%. The first reduction in seven years. And the main interest in Japan is already the lowest in the entire developed world. This measurement resulted in the Nikkei index to go up but closed the day with a loss of 5%. The bank of Japan defended this decision by saying that the economical crisis has “increased further in severity”.
Thursday announced Prime minister Taro Aso that they created a five trillion yen economic package to boost the slacking economy. The second stimulus in two months. It includes an expansion of tax cuts on the housing market to help the struggling housing market, guarantee the loan of employees of small companies (to restore faith in the economy, funding for care of children and the elderly, and support for the unemployed young people. This is necessary because these groups feel the impact the most in times of an economical recession.
The first package consisted out of 11.7 trillion yen proposed by the previous prime minister; Yasuo Fukuda. Once again a government has to interfere to prevent worse to happen. This is also caused by their weakened currency and the decreasing export to the US and Europe.
Source: http://news.bbc.co.uk/2/hi/business/7701319.stm
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