Bank of Japan Cuts Its Discount Rate

Japan’s central bank announced today that it will cut its official discount rate to 4.5% from 5.0%, effective immediately.

The decision was made at a meeting of the Bank of Japan’s special policy-making board, officials said.

Today’s cut in the key lending rate, the rate the central bank charges on loans to commercial banks, comes less than two months after another half-percentage-point reduction on Nov. 14.

The latest measure is intended to help spur Japan’s economic growth, which has been sluggish in recent months. Lower interest rates cheapen the cost of borrowing money and thus can boost consumer and business spending.

Earlier this month, the U.S. Federal Reserve Board slashed its key rate to 3.5% from 4.5% to stimulate the U.S. economy.