The Bank of Japan voted Friday to cut its key interest rate for the first time in more than seven years, finally joining central banks around the world in trimming borrowing costs to cushion the impact of the global financial crisis, according to AP. The Bank of Japan policy board voted in a rare 4-4 split decision to reduce the uncollateralized overnight call rate to 0.3 percent, the lowest among major economies. Gov. Masaaki Shirakawa, who has the final say in the event of a tie, voted in favor of a rate cut. The central bank, operating with one vacancy on its nine-member board, last loosened monetary policy in March 2001. «Adjustments in the world economy stemming from financial crises in the United States and Europe have further increased in severity,» the Bank of Japan said in its statement. «Under these circumstances, increased sluggishness in Japan's economic activity will likely remain over the next several quarters with exports leveling off and the effects of earlier increases in energy and materials prices persisting.» The move comes two days after the U.S. Federal Reserve slashed its key rate by half a percentage point to 1 percent, a level seen only once before in the last half century. Earlier this week, South Korea's central bank lowered rates by three-quarters of a point _ its biggest cut ever _ to 4.25 percent. China, Hong Kong and Taiwan also reduced rates this week. Many analysts are also expecting the European Central Bank to cut its key rate, now at 3.75 percent, when its policy panel meets on Nov. 6.
