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Yen Surges as Kuroda’s Yield Cap Shock Sparks Normalization Bets

  • BOJ widens movement range around 10-year bond yield target
  • Yield on sovereign notes due in a decade almost doubles
Bloomberg business news

WATCH: BOJ Governor Kuroda shocked markets by adjusting the central bank’s yield curve control program. Kathleen Hays reports.

Source: Bloomberg

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Bank of Japan Governor Haruhiko Kuroda shocked markets by doubling a cap on 10-year yields, sparking a jump in the yen and a slide in government bonds in a move that helps pave the way for possible policy normalization under a new governor.

The BOJ will now allow Japan’s 10-year bond yields to rise to around 0.5%, up from the previous limit of 0.25%, while keeping both short- and long-term interest rates unchanged, according to a policy statement Tuesday.