BOJ shocks markets with surprise widening of yield target band

Central bank to allow yields on 10-year JGBs to move within 50bps of 0% goal

Bank of Japan Gov. Haruhiko Kuroda has maintained that inflation is transitory and that a shift in monetary policy is premature. (Source photos by Kyodo and Nikkei)

MITSURU OBE, Nikkei Asia chief business news correspondent

December 20, 2022 12:09 JST

Updated on December 20, 2022 18:14 JST

TOKYO -- The Bank of Japan shocked markets with an unexpected widening of its target band for interest rates, sparking a rally in the yen, pushing up bond yields and triggering a slump in stocks.

In a policy statement on Tuesday, the central bank said it will allow yields on 10-year government bonds to move up or down within 50 basis points around its 0% target, wider than the previous 25-point band.