- ECONOMY
BOJ modifies monetary policy, expanding 10-year government bond yield fluctuations to plus or minus 0.5%

Bank of Japan Gov. Haruhiko Kuroda speaks at a press conference on Tuesday.
16:57 JST, December 20, 2022
The Bank of Japan decided Tuesday to modify its monetary policy, allowing 10-year Japanese government bond yields to fluctuate in a range of around plus or minus 0.5%, against the previously accepted range of around plus or minus 0.25%. The move represents an effective interest rate hike.
The central bank kept the short-term interest rate at minus 0.1% at a two-day meeting of its Policy Board that ended the same day.
Price increases have exceeded the BOJ’s 2% inflation target, but they have been caused mainly by the soaring cost of resources. Neither companies’ moves to pass higher costs onto retail prices nor improvements in household incomes have kept up with the pace of rising prices.
The central bank is believed to have given consideration to financial markets while shoring up the economy through monetary easing.
The BOJ aims for sustainable economic growth with stable price rises. The rate of increase in the domestic consumer price index has neared 4%, but the central bank anticipates that the rate will return to the 1% range next year and intends to continue its monetary easing until a virtuous cycle of improvement in corporate profits and wage hikes becomes firmly fixed.
The yen surged against the dollar, which fell to around ¥132 from above ¥137 in Tokyo trading Tuesday after the BOJ’s announcement.
The Nikkei Stock Average temporarily slumped more than 800 points on the Tokyo Stock Exchange on Tuesday following the announcement over fears of a possible slump in the Japanese economy.
The benchmark 10-year government bond yield temporarily jumped to 0.460%, up 0.210 percentage points from the previous day.
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