BOJ changes yield curve control, jolts markets with surprise monetary policy | CNN Business

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The Bank of Japan shocked markets with a surprise tweak to its bond yield controls that allows long-term interest rates to rise more

Shares tanked, while the yen and bond yields spiked following the decision, which caught offguard investors who had expected the BOJ to make no changes to its yield curve control until Governor Haruhiko Kuroda steps down in April. In a move explained as aimed at breathing life back into a dormant bond market, the BOJ decided to allow the 10-year bond yield to move 50 basis points either side of its 0% target, wider than the previous 25 basis point band.

“Through these steps, the BOJ will aim to achieve its price target by enhancing the sustainability of monetary easing under this framework,” the BOJ said in a statement, signaling that the move was aimed at prolonging YCC rather than phasing it out. Widening the band The benchmark Nikkei 225 slumped 2.5% after the decision, while the dollar fell 2.7% to a four-month low of 133.11 yen. The 10-year Japanese government bond yield briefly spiked to 0.460%, close to the BOJ’s newly set implicit cap.

 

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