The Bank of Japan's cut Friday in the benchmark interest rate by 0.2 percentage point to 0.3 percent is aimed at increasing liquidity in the money market amid the global financial turmoil, BOJ Gov. Masaaki Shirakawa said.
The central bank governor said financial markets around the globe have changed drastically over the past month, with stock prices tumbling, the credit spread on corporate bonds widening and the yen surging against other major currencies.
"Given these changes in the economic and financial conditions, it is necessary to lower the key interest rate and secure the liquidity (of the monetary market)," Shirakawa told a news conference after the Policy Board meeting.