Cutting rates from 0.3 to 0.1 percent looks like an exercise in futility. Perhaps the true benefit of a 0.2 percent cut is more political and economic. The Bank of Japan is seen to be doing something. These days, that is all that matters in the world of central banking.
From the FT......
"The Bank of Japan on Friday cut its policy rate to just 0.1 per cent – three days after the US Federal reserve moved its rate almost to zero – and announced it would take the unorthodox step of directly buying commercial paper in order to ease a corporate credit crunch.
The 20 basis point reduction to the overnight call rate – the BoJ’s second in two months – came amid a slew of economic news and recent rises in the yen to 13-year highs.However, Masaaki Shirakawa, BoJ governor, said no member of the bank’s policy board now seemed to think that expanding base money would stimulate the economy.
The Bank of Japan reduced its overnight call rate to 0.1 per cent from 0.3 per cent, amid a rapidly deteriorating economy."