Japan joins economic support drive

The Bank of Japan has responded to US and eurozone rate cuts

Japan has joined the US, Europe and Canada in easing monetary policy, in an effort to see off recession and calm markets following last week's terrorist attacks.

The Bank of Japan (BoJ) has cut its discount rate to 0.10% from 0.25%.

The move follows interest rate cuts ordered on Monday by central banks in countries including the US and Canada, and by the European Central Bank, which controls rates in the 12 states which have adopted the euro.

Shortly after the BoJ decision, the Bank of England said it was cutting its key interest rate by 0.25% to 4.75%.

'New era'

The cut in Japanese discount rates, which govern the interest the BoJ charges for loans to commercial banks, was interpreted as a small but symbolic move to back global economic support efforts.

The BoJ's room to manoeuvre was limited by a decision in March to cut its main interest rate back to zero, to support economic growth in a country already suffering its worst slump in 50 years.

But the Bank said it was taking "every necessary measure" to ease turmoil stemming from the attacks on the World Trade Center and Pentagon.

The Bank last week injected an extra 2,000bn yen ($17bn) into markets to help maintain the world's economic pulse.

Tuesday's cut was welcomed by Japan's Economy Minister, Heizo Takenaka, as a sign of the dawning of a "new age of international co-operation".