The main cause of the slump is that Japanese consumers are reluctant to spend money. Consumers and companies will not be able to take out loans with zero interest rates, but they will get rates close to zero. The reason is that the zero rate refers to the rate banks pay when they borrow the money from the central bank. They then charge customers a rate of interest, to make their profit. Tokyo hopes that its low interest rates make it less attractive to save money, and easier to borrow money for spending.
Companies can also benefit from cheap money, making it easier to fund their investment plans.
And Japan is suffering from deflation - prices of goods are actually falling each year. But the danger of deflation is that it makes consumers even more reluctant to spend, and makes it more difficult for companies to get out of debt. This is not the first time the Bank of Japan has had a zero interest rate policy. It only abandoned the policy in August, after the Bank said that it believed the economy was recovering and deflation was no longer a threat. The government has been urging the Bank to reconsider its policy ever since, fearing that the recession was getting worse.