Japan orders new economic package

Japan declined to join central banks across the world in cutting interest rates yesterday but has ordered an additional economic package as the financial crisis deepens.

The Bank of Japan said it would not take part in the co-ordinated 0.5 per cent rate cut by central banks as its rate is currently 0.5 per cent, the lowest among the major economies.

However, both Japan's central bank and the finance minister, Shoichi Nakagawa, welcomed the international action.

Although Japan is not altering its interest rate, the government is considering an additional financial package to prop up the market – a day after an 1.81 trillion yen emergency budget to tackle the crisis.

Prime Minister Taro Aso told reporters: "It is extremely unclear how financial market developments will affect the real economy, and we need to respond to it."

Media reports have speculated the additional package may include loans to small businesses and corporate tax cuts.

The Bank of Japan also injected four trillion yen into the money markets yesterday to help interbank lending.