BOJ Sends Yields Soaring With Surprise Change to Rate Limit
- Keeps negative rate, says 10-year yield band a reference point
- Bank says more flexible approach will help sustainability
Source: Bloomberg
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The Bank of Japan jolted financial markets by loosening its grip on bond yields in Governor Kazuo Ueda’s first surprise move since taking the helm, a step that will likely spur talk of potential policy normalization to come.
The BOJ kept its target for 10-year yields at around 0% but said its 0.5% ceiling was now a reference point, not a rigid limit as it sought to make its ultra-loose monetary policy program more flexible. The bank said it will offer to buy 10-year debt at 1% each day, suggesting an effective doubling of the movement range for yields.