Prime Minister Taro Aso on Thursday evening announced a ¥26.9 trillion economic stimulus package in an effort to minimize damage to the Japanese economy from the global financial crisis. The current economic turmoil could have a devastating effect on people's lives. As Mr. Aso said, "The economy is being battered by a once-in-a-100-years storm." The government is poised to start implementing part of the measures included in the package as soon as possible. This is a logical approach.
On Friday, the Bank of Japan cut its key interest rate from 0.5 percent to 0.3 percent and decided to implement credit-easing measures to bolster the sagging economy.
In the United States, the Federal Reserve on Wednesday cut the federal funds rate — the benchmark short-term target rate — by half a percentage point to 1 percent, the lowest since the June 2003-June 2004 period when the rate was kept at 1 percent. The Fed's action, which means a 4.25 percentage point slash of the benchmark rate in the past 13 months, testifies to the U.S. central bank authorities' apprehension about a further slowdown of the U.S. economy due to a decline in consumer spending and credit crunch for households and businesses caused by the financial market chaos.