Elements of the Zero Interest Rate Policy  The so-called zero interest rate policy comprises three elements. First, to encourage the unsecured overnight call rate to move as low as possible by providing ample funds. Second, to pay due consideration to maintaining the proper functioning of the market so as to avoid disturbance in the short-term money market.
And third, to continue with the current policy until deflationary concerns subside. Of these three, the first element is a specific directive to guide the interest rate down to around zero. Like the central bank in the US and elsewhere, daily monetary control in Japan is conducted through guiding the shortest inter-bank rate, namely the unsecured overnight call rate.