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.
