The Bank of Japan on Tuesday left its policy rate unchanged and said it will adjust its yield curve control band.
The BOJ surprisingly stated that it will flexibilizes yield curve control (YCC) of 10-year Japan government bonds unchanged at “around zero”, but widen the range around the band from its present plus and minus 0.25 percentage points to plus and minus 0.5 percentage points.
The adjustment is made in order to “improve market functioning and encourage a smoother formation of the entire yield curve, while maintaining accommodative financial conditions,” the BOJ said.
The Japanese yen surged up to 3% to stand at 134.33 against the U.S. dollar shortly after the announcement. Meanwhile, the Nikkei 225 Futures fell more than 4%, after closing its morning session 0.29% higher.
