Markets took the rate easing as a recognition by the central bank of deepening economic trouble. Quantitative easing refers to pumping up the money supply by setting inflation or monetary targets, or by buying huge volumes of Japanese government bonds or foreign currency. Interest rates don't matter. Until we see clear signs the Bank of Japan is expanding its balance sheet, the stock market and the economy will continue to weaken. Hayami said the BOJ would consider the benefits and side effects of a return to zero rates or an expansion of outright bond buying before rushing to ease policy further, but he added that Japan was in no risk of a deflationary spiral.
Prices are overall weak.
But the pace of recovery is slowing and we need to watch the downward pressures on prices stemming from weak demand. Traders said the stock market's bigger priority remained Wall Street, and investors took their cue from another unnerving tumble in the Nasdaq to punish Japanese high-tech stocks on Thursday. Reuters contributed to this report. Pages will open in a new browser window External sites are not endorsed by CNN Interactive. An AOL Time Warner Company.