Bank of Japan says not joining coordinated rate cut

TOKYO: The Bank of Japan said Wednesday it supports coordinated rate cuts by the world's central banks but is not participating as its benchmark rate is already low. The Japanese central bank said it "expresses its strong support" for the rate cuts by counterparts in the United States, the eurozone, Britain, Canada, China, Sweden and Switzerland.

"It is of utmost importance for every central bank to maintain stability of financial markets amidst the ongoing financial turmoil," the Bank of Japan said in a statement.

But it said that in Japan, "interest rates remain very low and monetary conditions remain accommodative".
Japan has kept its benchmark lending rate at 0.5 percent, the lowest among major economies since February 2007.

The coordinated interest rate cut came hours after Tokyo's benchmark share index suffered its worst plunge in more than two decades, falling more than nine percent.

The Bank of Japan statement, nevertheless, contended that "Japan's financial market has been stable in comparison with those in other industrialised countries." But it said Bank of Japan governor Masaaki Shirakawa had instructed staff to look at ways to make monetary systems more effective.

Hirohide Yamaguchi, an executive director of the central bank, said the BoJ may consider paying interest on banks' reserve accounts.

"The BoJ might consider whether (the Federal Reserve's) plan to pay interest on reserve accounts can be an example" for the reinforcement of money market operations, Yamaguchi told reporters in a late night press conference, according to Dow Jones Newswires.