JAPAN’S CENTRAL BANK has cut its interest rate to practically zero in an attempt to kickstart its sluggish economy, in a surprise move.

Rates had already been at a historically low 0.1% since late 2008 but have now been cut to somewhere between that rate and zero, meaning that no fixed rate is in place and the rate is adjusted depending on quantity.

The move is attempting to increase economic cash flow and help to fight the rising value of the yen, which has seen the export sector take a hit in recent months – especially given the falling value of the dollar in recent months.

Japan has also been hit by price deflation in recent months.

The new rate will be held in place until the Bank of Japan deems that “price stability is in sight”, labelling the move as “comprehensive monetary easing”.

The bank will also create a $50bn fund to buy government bonds in an attempt to further attack the price of the currency.

Japan’s Nikkei index rose 1.7% on the news, while the yen weakened moderately. The rally on the Asian markets as a result nudged the Dow Jones, S&P and Nasdaq indexes up by similar amounts.