The Bank of Japan today reinstated zero interest rates seven months after controversially abandoning the policy as the world's second-biggest economy threatens to relapse into crisis.
The central bank said it was boosting the level of reserves it leaves in the financial system to five trillion yen ($41 billion) from four trillion and thus expected the overnight call rate to return to about zero.
Until last August the Bank of Japan guided the rate - which governs inter-bank borrowing by commercial banks - to 0.02 per cent - effectively zero.
The central bank also said it would retain the new rate (down from 0.15 per cent now) until core consumer prices stopped falling.
It is the clearest indication yet of an inflation target for Japan.
Deflation has been the bane of the Japanese economy over the past decade's slump.
AFP