DHAKA: In a surprise move, the Bank of Japan has introduced a negative interest rate.

The benchmark rate of -0.1% means that commercial banks will be charged by the central bank for some deposits, reports the BBC.

It hopes this will be a disincentive to banks to save and prompt them to lend in another attempt to counter the continuing economic slump in the world's third-largest economy.

The eurozone also has negative interest rates, but this is a first for Japan.

It is a move that has been on the cards for Japan's stagnating economy for well over 10 years.

The decision to go negative came after a narrow 5-4 vote at the Bank of Japan's first meeting of the year on Friday.

"The BoJ will cut interest rates further into negative territory if judged as necessary," the Bank of Japan (BoJ) said, adding it would continue as long as needed to achieve an inflation target of 2%.

Some analysts have cast doubt over how effective the rate cut will be.

In a press conference, the BoJ's governor Haruhiko Kuroda said that the weakening growth rate of the global economy was the main factor behind the move: "Japan's economy continues to recover moderately and the underlying price trend is improving steadily... further falls in oil prices, uncertainty over emerging economies, including China, and global market instability could hurt business confidence and delay the eradication of people's deflationary mindset."

BDST: 1535 HRS, JAN 29, 2016
RS