Japan sends yen soaring and stocks tumbling with hint it could join rate-hiking party | CNN Business

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Japan’s central bank kept interest rates unchanged Friday despite rising inflation but hinted that it could gradually abandon years of ultra-cheap money, sending the yen soaring and stocks tumbling

The Bank of Japan said it kept unchanged its short-term interest rate at minus 0.1% and maintained its target for the yield on 10-year government bond at around 0%. But the central bank also said it would adopt a more flexible approach to controlling the yield on government bonds — which affects borrowing costs across the world’s third biggest economy, diluting a key pillar of its longstanding ultra-loose monetary policy.

“With extremely high uncertainties for economic activity and prices, the bank enhances the sustainability of monetary easing by conducting [yield curve control] with greater flexibility,” the bank said in a statement. The central bank also said it would offer to buy 10-year Japanese governments bonds at a yield of 1% through fixed-rate operations, above the previous rate of 0.5%.

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