Kuroda shocked markets by changing yield limit of BOJ bonds

The latest step by Bank of Japan Chair Haruhiko Kuroda shocked financial markets. The Central Bank has adjusted the program of managing the yield curve of government bonds. Thus, there was a jump in the yen and a bond yields’ decline just a few months before Kuroda’s resignation.

On Tuesday, according to the governor's statement on future policy, the BOJ will rise Japan's 10-year bond yield to 0.5%, up from the previous cap of 0.25%. The central bank said the move would enhance the sustainability of monetary easing.

The central bank left its yield target at about 0% and kept the short-term interest rate at -0.1%. It was also announced the bank wpuld significantly increase its bond purchases to 9 trillion yen ($67.5 billion) per month. The amount currently stands at 7.3 trillion yen.

All 47 economists surveyed by Bloomberg didn't expect any changes in policy. However, most of them were of the opinion that the bank should have taken more measures to optimize the bond market.