Bank of Japan keeps yield control policy unchanged

TOKYO – The Bank of Japan on Wednesday maintained ultra-low interest rates, including its 0.5 percent cap for the 10-year bond yield, defying market expectations it would phase out its massive stimulus programme in the wake of rising inflationary pressure.

At a two-day policy meeting, the BOJ kept intact its yield curve control (YCC) targets, set at -0.1percent for short-term interest rates and around 0 percent for the 10-year yield, by a unanimous vote.

The central bank also made no change to its guidance that allows the 10-year bond yield to move 50 basis points either side of its 0 percent target.

The decision follows the BOJ’s surprise move last month to double the yield band, a tweak that analysts say has failed to correct market distortions caused by its heavy bond buying.