The Bank of Japan jolts global markets

On July 28thbjbjbj the Bank of Japan (o) took markets by surprise. At the end of a two-day policy meeting Ueda Kazuo, the central bank’s governor, announced an unexpected change to its increasingly expensive policy of . The o raised its cap on ten-year government-bond yields, which it defends with regular and sometimes vast purchases, from 0.5% to 1%. Ten-year yields climbed to around 0.57% after the announcement, the highest in nearly a decade.Surging inflation over the past two years has led central banks around the world to raise interest rates forcefully. Japan’s central bank has been a stubborn outlier, keeping most of its monetary-stimulus measures—including negative interest rates and aggressive bond purchases—firmly in place. All told, the o’s ultra-low interest-rate regime, introduced in an attempt to boost the country’s sluggish rate of economic growth and prevent outright deflation, has now been active for a quarter of a century. Tweaking yield-curve control is not quite an abandonment of the regime. It does, however, set the country on course for higher rates.