The Bank of Japan has decided to lower its key interest rate further to between zero to 0.1 percent to keep the nation's economic recovery on track. This is the first time in 4 years and 3 months for the central bank to reinstate a virtual zero-interest rate policy.
The decision came in a 2-day meeting of the bank's policy board that ended on Tuesday. Board members discussed the global economy and the effects of a strong yen on corporate performance.
They agreed that while the Japanese economy is recovering moderately, the US downturn and the soaring yen could delay the country's move out of deflation.
The BOJ decided to address the concern, adding to previous measures in August.
It says it will keep the benchmark interest rate near zero until consumer goods prices rise by around one percent.
The central bank also said it is studying the creation of a fund to buy assets such as Japanese government bonds to stimulate the economy.