Why the Bank of Japan’s Surprise Policy Change Jolted Global Markets: Q&A

The Bank of Japan on Friday loosened its yield curve control (YCC) policy, a pillar of the central bank’s efforts to limit borrowing costs and stimulate the economy.

The vaguely-worded move sent a shudder across asset classes on Friday in Asia — even after rumors of such a move had roiled trading desks the prior afternoon in New York. Yields on 10-year Japanese government bonds jumped to their highest since 2014, while the yen seesawed between gains and losses as investors speculated whether this tweak was a precursor to more drastic changes for Japan’s ultra-easy monetary policy.