Interest rate cuts are typically a bullish scenario for share prices and, if not for the volatility on Wall Street and other unnerving developments both at home and abroad, the Tokyo stock market should have reacted positively to the Bank of Japan's latest move to ease its grip on credit.
Actually, however, the news of the discount rate cut and other measures has gone largely unheeded. Investors are opting to play it safe in the choppy market. Conventional wisdom holds, nevertheless, that lower borrowing costs go a long way toward helping shore up share prices.
On Feb. 9, the BOJ's policy-setting committee decided to cut the discount rate, introduce a Lombard-type lending facility and resume outright purchases of short-term government securities.