It was only by 25 basis points (.25%) to 2.25%, but it was still a bit of a shocker.

My guess is that they are, like too many “very serious people” around the world, concerned about the invisible bond vigilante fairies, and they figure that the US dollar, the currency of their chief customer for their export driven economy, will be strengthening because of the Euro/PIIGS kerfuffle, so they could.

I’m not sure if it makes sense for them, if it does not drive their currency too high, it probably does, if just because it gives their central bank some maneuvering room if the recession goes double dip before hitting the zero bound once again.