BoJ surprises with bond yield cap; Pledges to 'overshoot' inflation target

Taken new policy measures

The Bank of Japan has maintained negative interest rates but surprised investors by unveiling new monetary policy tools, such as placing a cap on 10-year bond yields.

BoJ governor Haruhiko Kuroda has pledged to cap 10-year government bond yields at 0%, which means the government is promising to buy any bonds offered for sale at that price, the FT reports. The BoJ will maintain its government bond buying programme in line with the current pace of ¥80trn a year, but will buy fewer very long-term bonds, which should allow the yield curve to steepen and make it easier for banks to earn profits. Additionally, the central bank has vowed to overshoot its inflation target and will continue to buy assets until it has been maintained at around 2% "in a stabl...